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