SEC Weighs Approving System to Monitor High-Frequency Trading Activity

As reported by Bloomberg’s Jesse Hamilton, the U.S. Securities and Exchange Commission said it will decide July 26 whether to establish a system to watch the trading behavior of big market participants including high-frequency trading firms and hedge funds.

The system, proposed three weeks before the May 6 crash that temporarily erased $862 billion in market value of U.S. shares, would apply to firms that buy and sell at least 2 million shares a day. Traders that execute $20 million of equities a day or $200 million in a month also would qualify.

Under the plan, the SEC would assign identification codes to the firms. Non-public data would be available to the SEC the day after a trade, allowing the agency to investigate manipulative and abusive practices, according to the proposal originally released April 14, 2010.

“The fact is that rapid technological advances have had an impact on trading strategies and on the ways in which some broker-dealers carry out their trades,” SEC Chairman Mary Schapiro said in a statement last year.

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