| April 10
April 10 The New York official responsible for
overseeing state securities laws on Thursday urged all U.S.
stock exchanges and trading venues to consider changing their
computerized order systems to stop high-frequency traders from
profiting at the expense of ordinary investors.
Chad Johnson, chief of the Investor Protection Bureau for
the New York Attorney General, said state investigations
now underway would show whether enforcement actions would be
"We shall see what the investigations show," Johnson told
the annual conference of Securities Traders Association of New
He said the exchanges and trading venues could take
"sensible action" beforehand, and he urged the implementation of
safeguards known in the industry as "speed bumps" designed to
take away an advantage he said high-frequency traders enjoyed.
"Market reform does not have to come from above," he said.
Regulatory scrutiny of high-frequency trading has increased,
sparked largely by author Michael Lewis's latest book, "Flash
Boys." The book argues that the U.S. stock market is rigged to
the benefit of the fast traders allegedly in cahoots with the
exchanges and alternative trading venues.
The Justice Department and FBI recently announced
investigations into high-frequency trading, while U.S. security
regulators and the New York Attorney General said their
investigations were ongoing.
Johnson said he knew of no regulation that would prevent the
exchanges from implementing a speed bump. Johnson referred to a
proposal by University of Chicago professors to hold "batch
auctions" and a system used by dark pool IEX Group that slows
orders entering the trading platform as examples.
Johnson also called for the elimination of a two-tiered
system of data feeds where high-frequency traders take advantage
of a faster, proprietary feeds to the detriment of those in the
market using a slower feed known as the consolidated tape.
Usage of the faster feeds, which he called "latency
arbitrage," reduced the amount of shares being offered in the
market because of fear of the practice, he said.
(Reporting By Herb Lash)