WASHINGTON, Sept 17 (Reuters) - U.S. securities regulators on Thursday proposed a ban on flash orders that stock exchanges send to a select group of traders fractions of a second before revealing them publicly.
The Securities and Exchange Commission is seeking to curb a practice criticized for giving an unfair advantage to some market participants who have lightning-fast computer trading software.
The agency also tightened rules on credit rating agencies by imposing more disclosure requirements and encouraging unsolicited ratings. Those moves, and others proposed by the SEC, took aim at a ratings industry widely criticized as having fueled the financial crisis through over-generous ratings assigned to toxic mortgage-backed securities.
The proposed ban on flash orders is part of a broader effort by the SEC to crack down on obscure corners of the U.S. stock market.
SEC Chairman Mary Schapiro said the agency will keep reviewing trading practices that may give an unfair advantage to some market players. 'Other market practices may have similar opaque features,' Schapiro said.
Supporters of high-frequency trading practices such as flash trading say they add needed liquidity to the markets, and allowed the markets to function smoothly during the financial crisis.
But critics, including some lawmakers, say the markets need to be better policed so all investors are operating on an even playing field.
The SEC will put its proposal out for public comment, and will later schedule a meeting to decide whether to adopt the proposal. The agency said it will seek feedback on on the cost and benefits of the proposed ban, and whether the use of flash orders in the options market should be evaluated differently from those in equity markets.
(Reporting by Karey Wutkowski; Editing by Tim Dobbyn) Keywords: SEC/FLASHTRADING (Email:karey.wutkowski@thomsonreuters.com +1 202 898 8374) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The Securities and Exchange Commission is seeking to curb a practice criticized for giving an unfair advantage to some market participants who have lightning-fast computer trading software.
The agency also tightened rules on credit rating agencies by imposing more disclosure requirements and encouraging unsolicited ratings. Those moves, and others proposed by the SEC, took aim at a ratings industry widely criticized as having fueled the financial crisis through over-generous ratings assigned to toxic mortgage-backed securities.
The proposed ban on flash orders is part of a broader effort by the SEC to crack down on obscure corners of the U.S. stock market.
SEC Chairman Mary Schapiro said the agency will keep reviewing trading practices that may give an unfair advantage to some market players. 'Other market practices may have similar opaque features,' Schapiro said.
Supporters of high-frequency trading practices such as flash trading say they add needed liquidity to the markets, and allowed the markets to function smoothly during the financial crisis.
But critics, including some lawmakers, say the markets need to be better policed so all investors are operating on an even playing field.
The SEC will put its proposal out for public comment, and will later schedule a meeting to decide whether to adopt the proposal. The agency said it will seek feedback on on the cost and benefits of the proposed ban, and whether the use of flash orders in the options market should be evaluated differently from those in equity markets.
(Reporting by Karey Wutkowski; Editing by Tim Dobbyn) Keywords: SEC/FLASHTRADING (Email:karey.wutkowski@thomsonreuters.com +1 202 898 8374) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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