Regulators are examining the structure of U.S. equity markets, including co-location, or allowing brokers and trading firms to rent space next to an exchange in order to gain quicker access to the markets.
The Securities and Exchange Commission should take a hard look at co-location, said SEC Commissioner Luis Aguilar at the Reuters Global Exchanges and Trading Summit.
I am not sure banning co-location will solve anything because it will just move to the next building or the building after that, said Aguilar, one of the five commissioners who makes decisions on federal securities rules.
The SEC is looking at whether the markets and traders need more rules as the markets have become more opaque and trades are executed in a fraction of a second.
The agency has issued a discussion paper on recent developments in market structure and is seeking public comment.
Aguilar said the SEC is waiting for information to come in, and standardizing fees may be an appropriate thing to do once the commission can see what's going on.
In recent months, Nasdaq OMX Group Inc has started publishing its co-location prices, and Direct Edge trading venue plans to do the same.
(Reporting by Jonathan Spicer and Rachelle Younglai)