As reported by Bloomberg’s Jesse Hamilton, the U.S. Securities and Exchange Commission will impose a system to monitor the behavior of high-frequency trading firms and hedge funds under new reporting standards for the most active market participants.
SEC commissioners voted 5-0 today to adopt a tracking system for firms that buy and sell at least 2 million shares a day or meet other volume standards. The system, initially proposed three weeks before the May 2010 crash that temporarily erased $862 billion in U.S. share value, aims to help guard against market abuse and manipulation.
“The collection of this information is particularly important given the increasingly prominent role played by very active market participants including high-frequency traders,” SEC Chairman Mary Schapiro said before the vote.
The system, which would monitor firms that execute $20 million of equities a day or $200 million in a month, gives the SEC access to non-public data maintained by the traders’ broker-dealers, who would have to provide it upon request. After the rule takes effect in about two months, about 400 large traders would have to identify themselves within 60 days and broker-dealers would have to begin maintaining transaction records within seven months, according to the SEC.