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SEC Votes To Propose Banning 'Flash Trading'

By a vote of 5-0, the SEC decided Thursday to propose a ban on "flash trading," a type of computer-driven stock trading that gives some traders a micro-second advantage over others. Some observers consider that split-second edge unfair.

The process is different from simple high-speed trading, a strategy used by nearly every major market player. Here's how I explained "flash trading" when it came to light in August:

"In flash trading, some members of some exchanges -- including Nasdaq, Direct Edge and BATS -- get a look at buy and sell information a millisecond before it becomes available to the public.

Normally, this wouldn't make any difference. But when you have computers capable of making millions of computations in the span of a millisecond, it could mean millions of dollars."

You can read the entire blog posting by clicking here.

-- Frank Ahrens
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By Frank Ahrens  |  September 17, 2009; 5:09 PM ET
Categories:  The Ticker  | Tags: SEC, flash trading  
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