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About time.
SEC moving toward banning flash ordersNEW YORK — The Securities and Exchange Commission is moving toward banning a trading practice that gives some brokerages a split-second advantage in buying or selling stocks.
SEC Chairwoman Mary Schapiro 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.
"I have asked the staff for an approach that can be quickly implemented to eliminate the inequity that results from flash orders," Schapiro said. Any proposal to eliminate the orders would still have to be approved by the entire commission and be open to public comment before being implemented.
Sen. Charles Schumer, D-N.Y., a critic of the orders, said in a statement that Schapiro personally assured him the SEC would ban the practice. Last month, Schumer sent a letter to the SEC urging it to eliminate flash orders and said that if it didn't, he would write legislation to do so.
Both Direct Edge and BATS said they would welcome any review of flash orders.
