flash trades

The Nasdaq stock market supports a ban on so-called flash trades that allow some market players to see buy-and-sell information milliseconds prior to it being made available to the public, Sen. Charles Schumer said in a statement Tuesday.A spokeswoman for Nasdaq OMX Group Inc. said the company didn't have comment beyond a letter Nasdaq CEO Robert Greifeld sent to the Securities and Exchange Commission on Monday.Greifeld wrote to SEC Chairman Mary Schapiro that concerns are justified" about flashes and any order that is even briefly shielded from the entire market.

Schumer said that Greifeld told him that Nasdaq began offering flash orders "reluctantly" after other trading platforms did so. The senator has asked regulators to crack down on flash orders, saying they are unfair to those investors who aren't privy to the data.Schumer wrote in a letter to Schapiro on Friday that he will try to use legislation to curb the practice if the agency doesn't do so.High-frequency trading is driven by powerful computers that can send millions of trade orders each second. It has grown sharply in recent years, helping hedge funds and large banks make big profits.Rather than destabilizing the markets,

Mr. Niederauer said, high-frequency trading adds liquidity to the marketplace and so probably does the opposite, reducing market volatility. Aug. 4 (Bloomberg) -- The U.S. Securities and Exchange Commission plans to ban flash trades that give some brokerages an advance look at orders, Senator Charles Schumer said, citing a conversation with SEC Chairman Mary Schapiro.Schumer said Schapiro “personally assured him that the agency plans to ban the practice” in a phone call yesterday, according to a statement. In a separate statement, Schapiro said she has asked her staff to eliminate the inequity that flash orders cause.It’s preferencing one group over another, and that’s not the way markets should work, said Michael Panzner, author of The New Laws of the Stock Market Jungle and a former trader for George Soros’s hedge fund.

It certainly on its face seems unfair and up until now was against the spirit, now perhaps against the actual rules, of fair play.A ban would reverse decisions since at least 2004, when SEC first approved the systems at the Boston Options Exchange. Nasdaq OMX Group Inc., Bats Global Markets, Direct Edge Holdings LLC and the CBOE Stock Exchange give information to their clients about orders for a fraction of a second before the trades are routed to rival platforms.We salute the SEC for moving forward with this ban that will restore integrity to the markets, Schumer said in an e- mail.

The agency is absolutely making the right call by stepping up and ending this unfair practice. 2.4% of TradingSchapiro said any proposal to ban the transactions would require approval from SEC commissioners.Flash orders represented 2.4 percent of the total shares traded in June, according to the New York brokerage Rosenblatt Securities Inc. At Direct Edge, which handles most of the flash volume, revenue from its Enhanced Liquidity Provider program has helped it cut other trading fees and more than double its market share since November.

Schumer told the SEC in a July 24 letter to prohibit flash orders, saying he would propose legislation barring them if the agency didn’t act.Flash systems trace their roots as far back as 1978 to efforts by exchanges to electronically replicate how a trader might yell an order to floor brokers before entering it into the system that displays all bids and offers.Nasdaq shares fell as much as 3.1 percent to $20.78 after Schumer’s statement. NYSE Euronext, an exchange owner that doesn’t use flash orders, added up to 2.7 percent to $27.50.