| WASHINGTON, June 9
WASHINGTON, June 9 A U.S. Senate investigative
panel said on Monday it plans to hold a hearing next week to
probe the role that high-speed trading plays in the markets and
whether it is harming investor confidence.
The June 17 hearing before the Permanent Subcommittee on
Investigations (PSI) will also explore whether conflicts of
interest between brokers that place customer orders and trading
venues that pay brokers in exchange for those orders could be
adversely impacting investors.
The Securities and Exchange Commission allows trading venues
to pay brokerages for order flow, as long as the payments are
properly disclosed and rules about getting customers the best
price in the shortest possible time are followed.
But some have raised concerns about whether payment for
order flow creates perverse incentives that may not lead to best
The PSI is a high-profile congressional panel chaired by
Senator Carl Levin of Michigan. Over the years, it has produced
crucial investigative reports into off-shore tax evasion, the
causes of the financial crisis and the JPMorgan Chase & Co
London Whale trading incident.
The hearing comes at a time when the SEC is preparing to
unveil a slew of new rules targeting core equity market
Last week, SEC Chair Mary Jo White said her staff is in the
midst of developing a proposed "anti-disruptive trading rule" to
curb short-term trading in times of market stress, and rules
requiring brokerages to disclose more details about how they
route orders for institutional investors.
In May, Reuters also reported that the SEC is separately
conducting a wide-ranging probe into how brokerages are handling
retail customer orders.
The PSI said it plans to call witnesses from stock
exchanges, brokerage firms and institutional investors to
A full list of witnesses will be released on Friday.
(Reporting by Sarah N. Lynch; Editing by Lisa Shumaker)