SEC Chair White on sweeping trading initiatives
1:30 pm ET
By Scott Patterson
Securities and Exchange Commission Chairwoman Mary Jo White unveiled a sweeping set of initiatives Thursday to address mounting concerns about the impact of computer-driven trading on the stock market, including proposals that would extend oversight of high-frequency traders and dark pools.
White said the agency will launch a new committee to weigh proposed SEC initiatives and rule changes about how the stock market functions. The SEC will also review key market regulations and exchange practices such as the use of complex order types that can give certain investors an advantage, she said.
The proposed measures will help the market "operate openly, fairly and efficiently to benefit investors and promote capital formation," White said.
The new rules, if approved and implemented by the SEC , could force significant changes upon high-frequency traders, who now account for more than half of all stock-market volume, according to analysts.
Among the most significant proposals unveiled by White Thursday is a rule that would require high-frequency traders to register with regulators as broker dealers, pulling them further under regulatory scrutiny. High-frequency traders have largely avoided direct oversight since they are typically private outfits that trade on behalf of their owners.
White also directed SEC staff to develop a new anti-disruptive trading rule to prevent rapid-fire traders from engaging in short-term strategies that can aggravate market volatility.
The proposals will be developed by the SEC's staff in the coming months and will require a vote by the full commission, meaning it could be months--if not years--before they're fully implemented.
White's speech is her most direct response to rising concerns that the growth of high-speed trading and expansion of trading away from public exchanges have substantially changed how the market functions. Critics say the firms at times have access to advantages that give them a leg up over other investors.
Many of the proposals are likely to trigger pushback from some high-speed firms and other market players. Defenders of high-speed trading say the firms help regular investors since the traders stand ready to buy and sell under most market conditions.
It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.
~ Thomas Sowell
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