“New York Times (April 7, 2013)
U.S. regulators like FINRA need to confront today’s changing market where trading “has increasingly migrated away from public exchanges, like the New York Stock Exchange, to private trading venues, mostly operated by big banks.” With approximately 40% of trades being handled through dark pools and internalizers, markets are losing transparency and may become more susceptible to crashes and manipulation. Canadian and Australian regulators have already taken steps to protect their markets. U.S. regulators need to get with the program. “The market cannot be efficient if many orders never see the light of day. An inefficient market is neither fair nor stable, which makes a strong regulatory response to protect investors imperative.”
Tags: Australia, Canada, Dark pools, Efficient markets, FINRA, Investors, NYSE, U.S.
Financial Times (August 23)
High-frequency traders are being scrutinized by the Financial Industry Regulatory Association (FINRA). Broker-dealers that provided clients with direct market access may be fined if they did not implement required risk-management controls. The Financial Times thinks this is a good thing. During the May 6 “flash crash” U.S. stocks dropped almost 1,000 points, yet “officials still do not fully understand what happened.” Regulators need to “catch up.” Technical fixes and new rules can help “ensure markets serve the non-professional users who access them.”
Tags: Broker dealers, FINRA, Flash crash
