[Infowarrior] - SEC to Ban Flash Trades of U.S. Stocks

[Richard Forno]

SEC to Ban Flash Trades of U.S. Stocks, Schumer Says (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aoCJnYcSVhYk

By Edgar Ortega

Aug. 4 (Bloomberg) -- The U.S. Securities and Exchange Commission  
plans to ban flash trades that give some brokerages an advance look at  
orders, Senator Charles Schumer said, citing a conversation with SEC  
Chairman Mary Schapiro.

Schumer said Schapiro “personally assured him that the agency plans to  
ban the practice” in a phone call yesterday, according to a statement.

“We salute the SEC for moving forward with this ban that will restore  
integrity to the markets,” Schumer said in a statement e-mailed today.  
“The agency is absolutely making the right call by stepping up and  
ending this unfair practice.”

Nasdaq OMX Group Inc., Bats Global Markets, Direct Edge Holdings LLC  
and the CBOE Stock Exchange give information to their clients about  
orders for a fraction of a second before the trades are routed to  
rival platforms. The systems are meant to give investors an additional  
opportunity to complete a transaction. Schumer told the SEC in a July  
24 letter to prohibit flash orders, saying he would propose  
legislation barring them if the agency didn’t act.

Nasdaq shares fell as much as 2.3 percent to $20.97 following  
Schumer’s statement. Goldman Sachs Group Inc., which says it doesn’t  
use flash orders for its proprietary trading, fell to $163.75 from  
about $165.10.

To contact the reporter on this story: Edgar Ortega in New York at ebarrales at bloomberg.net

Last Updated: August 4, 2009 12:01 EDT