The war on high frequency trading continues apace – and already there have been some high-profile casualties, or at the very least, capitulations.
Both Nasdaq and BATS said on Thursday they will stop offering flash trading – mere months after they initiated the service on June 3.
Nasdaq statement:
NEW YORK, Aug 6, 2009 (GlobeNewswire via COMTEX News Network) — The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced that it will voluntarily cease offering flash order types, effective September 1st, 2009.
We appreciate that Chairman Schapiro and the Commissioners will assume overall leadership for the industry to conduct a comprehensive review of all issues related to flash orders. We recognize the SEC’s rulemaking process will take time, yet as an exchange we have the ability to move on our own. We respectfully call on other markets offering similar functionality to make the same decision.
Bloomberg, citing a spokesman, reported that BATS will also cease to offer its flash program, BOLT.
No word from Direct Edge (which has provided a flash trading program for three years), CBOE and NYSE Euronext – yet.
The announcement comes on the same day Senator Edward “Ted” Kaufman, a champion of reinstating the uptick rule, held a conference call for bloggers in which he deplored the “unfairness of the markets”, as epitomised by high frequency trading (and the “outrageous” colocation of computers).
“The priority for me is to make markets level,” Senator Kaufman said on the call.
And in a statement released after the Nasdaq announcement, he added:
I applaud Nasdaq for doing the right thing and not waiting on the SEC to ban flash orders. This is the urgency I have been talking about. I call on the other exchanges and trading venues who offer flash orders also to move now to eliminate flash orders and begin the first step to a level playing field for investors.
Related links:
“hysterics about HFT… and flash trading in particular, could represent special pleading by NYSE to hobble competitors” – Streetwise Professor
The dash to flash – FT
HFT correlations at BarCap – FT Alphaville
The Cold War in high frequency trading turns hot – FT Alphaville
High frequency trading in Europe – FT Alphaville