SEC Moves to Control Robot Stock Traders

Commission proposes overhaul to trading rules
By Kevin Spak,  Newser Staff
Posted Jun 5, 2014 4:00 PM CDT
In this Tuesday, Aug. 23, 2011 file photo, Bank of America Merrill Lynch traders work on the floor of the New York Stock Exchange in New York.   (AP Photo/Henny Ray Abrams)

(Newser) – The SEC is finally trying to rein in the robots. Chairman Mary Jo White today announced a massive initiative designed to tame high-frequency traders, the Wall Street Journal reports. These automated trades currently make up more than half of all trading volume, yet they've almost totally avoided direct regulatory oversight because the computers are trading on behalf of their owners, not clients.

The rules White is proposing would change that, forcing high-frequency traders to register as broker dealers. White also said the SEC was working on rules to prevent the computers from engaging in strategies that put the market at risk of massive swings, like the infamous flash crash. The SEC also introduced plans to affect how human traders operate, Bloomberg adds—the agency is concerned that the stock exchanges have too many types of orders, adding complexity for no reason, and that some traders are using exchange-sold price feeds that are faster than the ones the general public relies on.

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