US regulators propose ban on ‘flash’ trading

Full Story at money.cnn.com

WASHINGTON (Reuters) – U.S. securities regulators proposed Thursday a ban on flash orders that stock exchanges send to a select group of traders, fractions of a second before revealing them publicly.

The Securities and Exchange Commission is seeking to end the practice criticized for giving an unfair advantage to some market participants who have lightning-fast computer trading software.

Nasdaq OMX’s Nasdaq Stock Market and privately-held BATS Exchange recently canceled their flash services that disclosed buy and sell orders to specific trading firms before sending them to the wider market.

NYSE Euronext’s New York Stock Exchange did not adopt the flashes under scrutiny but major alternative venue Direct Edge still offers flashes.

The SEC will put its proposal out for public comment for 60 days, and will later schedule a meeting to decide whether to adopt the proposal.

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