SEC signals shake-up of equity market rules - Wall Street Examiner Forums and Bears Chat

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SEC signals shake-up of equity market rules retail investors had lost out from the $2B of stop loss orders Rate Topic:

#1 qqqbear

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Posted 08 September 2010 - 07:21 AM

SEC signals shake-up of equity market rules
By Jean Eaglesham in New York

Published: September 7 2010 22:45 | Last updated: September 7 2010 22:45

A wide-ranging overhaul of the rules governing equity markets, including tougher controls on high-frequency traders, is being weighed by the Securities and Exchange Commission in the wake of the May 6 “flash crash”, the agency’s head said.

Mary Schapiro, SEC chairman, on Tuesday sent the clearest signal yet that the regulators intended to shake up the rules governing market participants’ obligations, which pre-date the rapid growth of high-frequency trading. Requirements for high-frequency traders to maintain liquidity in stocks and to avoid aggressively driving prices down are being considered, along with curbs on “quote stuffing” and revised controls to weed out aberrant orders, she said.

In a speech to the Economic Club of New York, Ms Schapiro dismissed suggestions that the events of May 6 were an aberration. Instead, she said the flash crash had highlighted “serious questions and concerns” raised by the transformation of market structures over the past decade.

Immediate rules imposed by the regulators following May 6 – including new circuit breakers to stop trading in stocks where prices move rapidly – were “likely not sufficient” to address broader concerns about investor protection, Ms Schapiro said.

She cited the “troubling” withdrawal of mutual funds from equity markets after May 6, saying retail investors had lost out from the $2bn of stop loss orders – orders to sell at a specified price – triggered during the 30-minute price gyrations on May 6.

http://www.ft.com/cm...144feab49a.html