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SEC to crack down on HFT?

As folks who read this blog regularly know, I often return to the theme of latency and high frequency trading (HFT).  So a friend tipped me to look at the SEC's latest consultation document released in January on trading in American equities markets.  Interesting section at the bottom of page 62:

Latency of Consolidated Data.

The Commission requests comment on all aspects of the latency between consolidated data feeds and individual trading center data feeds.

What have market participants experienced in terms of the degree of latency between trading center and consolidated data?

Is the latency as small as possible given the necessity of the consolidation function, or could plan processor systems be improved to significantly reduce the latency from current levels, while still retaining the high level of reliability required of plan processors?

More broadly, is the existence of any latency, or the disparity in information transmitted, fair to investors or other market participants that rely on the consolidated market data feeds and do not use individual trading center data feeds?

If so, should the unfairness be addressed by a requirement that trading center data be delayed for a sufficient period of time to assure that consolidated data reaches users first?

Would such a mandated delay adequately address unfairness?

Would a mandatory delay seriously detract from the efficiency of trading and harm long-term investors and market quality?

Should the Commission require that additional information be included in the consolidated market data feeds?

I think change is afoot … and will MiFID Wave 2 do the same?

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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