March 18, 2014 / 1:16 PM / in 4 years

New York attorney general calls for curbs on traders

NEW YORK, March 18 (Reuters) - New York’s attorney general on Tuesday called for U.S. stock exchanges to limit services offered to high-frequency traders that can give them unfair advantages.

The stock exchanges sell high-frequency traders direct access to data centers and provide extra network bandwidth and other services that allow them to trade on information before others can possibly react, New York Attorney General Eric Schneiderman said.

“Rather than curbing the worst threats posed by high-frequency traders, our markets, as structured today, are increasingly too focused on catering to them,” Schneiderman said in prepared remarks at a symposium hosted by New York Law School.

He suggested reforms for stock exchanges, such as a proposal by University of Chicago economists that they process orders in batches rather than continuously, to ensure that price trumps technology in deciding who obtains a trade.

Schneiderman has been conducting a sweeping investigation of early access to data. Last month, Berkshire Hathaway’s Business Wire said it would no longer sell potentially market-moving press releases directly to high frequency-trading companies after months of discussion with his office.

In January, BlackRock Inc, the world’s largest asset manager, agreed to end its analyst survey program worldwide, and 18 brokerages, including Goldman Sachs, JPMorgan Chase and Citigroup, later agreed to end their participation in such programs.

Last July, Thomson Reuters Corp said it would suspend its early release of the widely watched Thomson Reuters/University of Michigan consumer sentiment data to a small group of clients in response to the probe.

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