Blink and you’ll have missed it:
Finally, we are also reviewing the rise of high-frequency electronic trading strategies, broker arrangements that can give their customers direct access to the markets, and exchange co-location services that provide speed advantages to customers in obtaining market data and executing trades.
That’s the SEC’s Mary Schapiro, addressing an open meeting at the Commission on Wednesday.
There was no further detail on what aspects of HFT the regulator might be interested in, but we guess that will not stop Zerohedge heading off into orbit.
Much of Schapiro’s address was actually about dark pools, those private stock markets that have put the likes of the LSE under so much competitive pressure.
Predictably enough, the SEC wants the lights switching on. In particular, the regulator is interested in so-called actionable indications of interest – the messages sent out to limited groups of market participants alerting them to buying or selling interest.
Schapiro is worried that IOIs and the like are creating a two-tiered market (as if one didn’t already exist). So these quotes are now to be subject to the same disclosure rules covering stock market pricing information generally.
Also, dark pools will have to display their prices to the public when trading volume for a stock is more than 0.25 per cent of the total – as against 5 per cent currently.
That would appear to scupper the ruse whereby dark pools close down trading in a particular stock if and when trading approaches the 5 per cent privacy limit.
So yes, newspaper sub-editors really can use the headline: SEC shines light on…
Related links:
Why are regulators afraid of the dark? – FT Alphaville
Schapiro video – SEC