Update: More from WSJ:
In a statement, Sen. Schumer said he spoke with SEC Chairman Mary Schapiro, who informed him of an imminent ban during a telephone call Monday. The ban will come as part of a broader look at dark pools — electronic trading venues where money managers trade large blocks of shares anonymously — and high-frequency trading, he said.
Ms. Schapiro said Tuesday that she has instructed SEC staff to explore “an approach that can be quickly implemented to eliminate the inequity that results from flash orders.”
“Under the rule-making process, such a proposal to eliminate the ability to flash orders would need to be approved by the commission and be open to public comment,” she said.
Original post: Of all the politicians out there, NY Sen. Chuck Schumer has been the most receptive to the high-speed/Flash trading controversy.
He now claims — though it’s not clear what it’s based on — that the SEC is set to come down with a ban on Flash trading.
While there are multiple permutations of the the HFT controversy, the concern with Flash trading is that it gives some, preferred traders an early look at the order book before others. Defenders argue that it’s the equivalent of signalling orders to traders in one’s own vicinity as a way of cutting down the cost of routing a trade.
If true, it’s not clear whether this will be enough to satisfy Schumer, or whether he’ll push for an outright ban on all of HFT as he’s threatened.
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