| WASHINGTON, June 5
WASHINGTON, June 5 The top U.S. securities
regulator said on Thursday she is developing rules targeting
high-speed traders, less transparent trading venues and
order-routing practices, a move designed to promote fairness for
investors, shine more light on the markets and bolster
U.S. Securities and Exchange Commission Chair Mary Jo
White's ambitious proposals, unveiled in a speech in New York
City, mark the first time she has articulated her plan for
revamping equity market structure rules since she took over at
the SEC in the spring of 2013.
White said she has numerous regulatory proposals in the
works, including an "anti-disruptive trading" rule to rein in
aggressive short-term trading by high-frequency traders during
vulnerable market conditions, and a plan to force more
proprietary trading shops to register with regulators and open
their books for inspection.
White also said the SEC is working on a handful of
One such rule would require alternative trading venues such
as dark pools and brokerage internalizers to disclose more to
regulators and the public about how they operate.
Dark pools allow investors to execute trades anonymously and
do not make trading data available until after the trade is
Another proposed measure would seek to mitigate potential
conflicts of interest at brokerages by requiring more disclosure
on how they handle orders for large institutional investors.
"Investors and public companies benefit greatly from robust
and resilient equity markets," White said in prepared remarks.
"I am recommending additional measures to further promote market
stability and fairness."
The SEC has been exploring potential equity market structure
reforms since early 2010. The agency's review intensified later
that year, after the May 2010 "flash crash" incident in which
the Dow Jones Industrial Average plunged 700 points before it
Regulators traced the rapid plunge back to the trading
strategies of a computer algorithm that started in the futures
market and quickly spread to the equities markets.
Although no high-speed trading tactics were to blame for the
incident, it sparked a worldwide debate about the impact
high-speed trading has on the marketplace, and whether the SEC's
major market rule changes in the early to mid-2000s have led to
unintended consequences that gave some investors an edge over
One rule in particular, known as Regulation National Market
System (REG NMS), was designed to promote competition and price
improvement but has since been blamed for overly fragmenting the
market and giving rise to high-speed trading.
The debate over high-speed trading was reignited this year
with the publication of the book "Flash Boys" by best-selling
author Michael Lewis.
In the book, Lewis alleges high-speed traders have rigged
the market because they are able to see first how others are
trading, jump ahead and pocket the spread.
White has since refuted Lewis' assertion that the markets
However, she has repeatedly pledged since her U.S. Senate
confirmation last year to bring certain "data-driven" changes to
the equity markets to promote more confidence and stability.
Any regulations that are ultimately proposed will have to be
vetted through a public comment process and approved by a
majority of the SEC's five commissioners.
In her speech Thursday, White also outlined several
long-term initiatives to better understand how the SEC's past
rules have shaped the present-day marketplace.
Those include a review of how REG NMS has fragmented the
market. She also said the SEC would re-examine the regulatory
model for trading venues, including both exchanges and
alternative trading systems.
(Reporting by Sarah N. Lynch; Editing by Bill Trott)