Eric Hunsader on the SEC sex and corruption lawsuit and HFT jaywalkin
The Securities and Exchange Commission expanded a probe that reportedly intensifies oversight on stock exchanges. According to a Wall Street Journal article, federal securities regulators are increasing exchange oversight as they attempt to catch up to the alleged advantages developed by sophisticated high-frequency traders. The probe has led the SEC to review how the exchanges develop new products, communicate with investors and provide incentives to trade.
The SEC has reportedly stepped up this scrutiny in part over its findings from a probe earlier this year when regulators looked into trading order types and the benefits for high-frequency traders. Order types can determine how much investors pay for shares, and whether the order will move share price up or down. In addition to the unfair advantages created by order types, there is concern that exchanges have given some firms increased insight into how their systems operate. We talk to Nanex Founder Eric Hunsader about the advantages for high-frequency traders and how to enforce regulations to make sure they follow the rules.