Following Nasdaq Halt, U.S. Agencies Aim to Clamp Down Further on HFTs
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With the Nasdaq crashing for a better portion of the trading day Thursday, you can bet high-frequency traders (HFTs) will be under scrutiny.
The WSJ today notes the the Commodity Futures Trading Commission (CFTC) is joining other regulators like the U.S. Securities and Exchange Commission on creating a road map to curtail the practice of high-speed trading. The CFTC's plan is about 100 pages long and may be released as early as next week.
Along with yesterday's Nasdaq outage, many attribute HFTs to the "flash crash" of 2010, as the market sank and algorithms kicked-in to close positions, making the sharp drop in the market even worse.
No real regulation has been put in place since to ebb HFTs, which make money by exploiting inefficiencies in markets with a large amount of orders. Though the Nasdaq issued was said to be due to a computer glitch, algos in place may have exacerbated the issue.
Parts of the new regulation could include tagging HFTs with a special code and more control over fees and incentives given out by exchanges that knowingly handle high-volume orders from single firms.
The SEC proposed a rule last March aimed at standardizing policies and procedures currently in place to control computer-trading systems.
Before the new policies can be proposed, the CFTC has to approve the measures.
U.S. markets are mixed in early trading Friday.
The WSJ today notes the the Commodity Futures Trading Commission (CFTC) is joining other regulators like the U.S. Securities and Exchange Commission on creating a road map to curtail the practice of high-speed trading. The CFTC's plan is about 100 pages long and may be released as early as next week.
Along with yesterday's Nasdaq outage, many attribute HFTs to the "flash crash" of 2010, as the market sank and algorithms kicked-in to close positions, making the sharp drop in the market even worse.
No real regulation has been put in place since to ebb HFTs, which make money by exploiting inefficiencies in markets with a large amount of orders. Though the Nasdaq issued was said to be due to a computer glitch, algos in place may have exacerbated the issue.
Parts of the new regulation could include tagging HFTs with a special code and more control over fees and incentives given out by exchanges that knowingly handle high-volume orders from single firms.
The SEC proposed a rule last March aimed at standardizing policies and procedures currently in place to control computer-trading systems.
Before the new policies can be proposed, the CFTC has to approve the measures.
U.S. markets are mixed in early trading Friday.
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