SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : The *NEW* Frank Coluccio Technology Forum
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Frank A. Coluccio who wrote (44833)12/23/2015 3:33:35 PM
From: axial  Read Replies (1) of 46821
 
Trying to Force the S.E.C.’s Hand on High-Speed Trading

'All of which brings us back to the S.E.C. A recurring theme in the IEX application is that the quiet revolt by investors outlined in “Flash Boys” has now become a full-fledged movement for a referendum on our speed-based market structure.

This framing undoubtedly puts the market regulator in an uncomfortable position, particularly because the agency only recently commenced a study of latency arbitrage. Can the S.E.C. risk approving the application — and its explicit position that latency arbitrage is “pernicious” — without a formal cost benefit analysis of the issue? Given IEX’s success in drawing investors to its dark pool, can the market regulator risk rejecting it without endorsing an exchange structure that facilitates latency arbitrage? And if the S.E.C. approves the application, does this mean it’s time to consider moving to frequent batch auctions?

Whatever one makes of the merits of IEX’s application, it is difficult not to see the episode as a clear example of the growing divide between the speed with which our market microstructure evolves and the ossified process by which it is regulated. Media attention to latency arbitrage might be novel, but the issue is hardly a new one; investors have voiced concerns about exchanges’ preferential distribution of market data since at least 1975. In light of the S.E.C.’s unwillingness to take any action, IEX and its backers simply took matters into their own hands.

Of course, one could view this as exactly how private ordering is supposed to work. But given the complexity of our market structure regulations, the distinction between efficient private ordering and externalizing the cost of inefficient regulations on others is hardly clear. After all, couldn’t co-location also be said to be a product of private ordering? Concerns about how the speed bump will affect trading at other exchanges make the distinction similarly blurred for IEX’s application.

In light of this uncertainty, regulation by application is an ill-advised technique for regulating a market. Whatever comes of the IEX application, we hope that the experience encourages the S.E.C. to be more responsive to issues that are known to concern market participants.'

[Emphasis added]

Jim
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News