High speed trading for stocks is under pressure from a senior Senator who has called on the top U.S. securities regulator to ban a certain type of orders which he says gives and advantage to some traders over others.
Sen. Charles Schumer of New York wrote a letter to Securities and Exchange Commission Chairman Mary Shapiro on Friday, asking her to ba flash orders for stocks which allow some traders to learn the price of stocks up to half a second before other traders.
I she doesn't, he said he would introduce legislation that would ban it, according to Reuters.
This type of order seriously compromises the integrity of our markets and creates a two-tiered system where a privileged group of insiders receives preferential treatment, he wrote in the letter, according to Reuters.
If the SEC fails to curb this practice, I plan to introduce legislation in the U.S. Senate to prohibit the use of flash orders,' he added.
The New York Stock Exchange's parent company NYSE Euronext has previously complained about the trades, which are offered by market run by Nasdaq OMX and BATS, according to the report.
Schumer's letter mentions Direct Edge, Nasdaq and BATS.