SEC approves high-frequency trade audits

 As  Ronald D. Orol from Marketwatch has reported, The Securities and Exchange Commission on Wednesday narrowly approved a rule designed to give exchanges more information about high-frequency trades.

The rule, which was approved by a vote of 3 to 2, sets in motion the creation of a so-called consolidated audit trail, a trade tagging and data collection system that would help the agency track information about trading orders so it can better understand the fast-paced markets. SEC Chairman Mary Schapiro, a Democrat, voted with the agency’s two Republican commissioners to approve the rule.

“The availability and quality of trading data are central to the SEC’s ability to protect investors, and to maintain fair, orderly, and efficient markets,” said Schapiro at a meeting to vote on the rule.

The rule was adopted more than two years after the so called “flash-crash” occurred, where the Dow Jones Industrial Average dropped nearly 1,000 points before swiftly recovering to a 348-point loss.

Based on the rule, exchanges and broker-dealers will be required to provide trade information to a central repository by 8 a.m. the next trading day.

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