SEC To Ban Flash Trading?

SEC moving toward banning flash orders (8/4/09 AP via Yahoo Finance)

"NEW YORK (AP) -- The Securities and Exchange Commission is moving toward a ban on a trading practice that gives some brokerages a split-second advantage in buying or selling stocks.

"SEC Chairwoman Mary Schapiro has said in a statement Tuesday that the agency is working to create a rule to ban the trades known as flash orders.

"Flash orders give certain members of exchanges including Nasdaq, Direct Edge and BATS the ability to buy and sell order information for milliseconds before that information is made public. High-speed computer software can take advantage of that brief period to allow those members to get better prices and profits."

Direct Edge is the network supported by Goldman Sachs, Citadel, and Knight Trading, and it pioneered in this type of trading.

Let's see... Qui bono?

Answer: New York Stock Exchange, who doesn't have flash trading and whose trading volume has been suffering because of that.

Tweet