The U.S. Securities and Exchange Commission is making moves to control stock trading robots, the automated traders that have largely avoided oversight because they operate on behalf of their owners and not their clients, the Wall Street Journal reported on Thursday. Chairperson Mary Jo White revealed a new initiative would be put into place to monitor trading practices.
“The SEC should not roll back the technology clock or prohibit algorithmic trading, but we are assessing the extent to which specific elements of the computer-driven trading environment may be working against investors rather than for them,” White told the Sandler O’Neill & Partners Global Exchange and Brokerage Conference, according to Bloomberg.com.
The automated trades (or robots) make up more than half of the trading volume. The new rules imposed would force these high-frequency traders to register as stockbrokers.
New rules would also limit the computers' ability to put the market at risk for dangerous swings, as happened with the notorious flash crash.
White was praised for her actions, with New York Attorney General Eric Schneiderman taking to Twitter on Thursday. He said he was “pleased to see” White’s comments “calling for market reforms to curb unfair advantages for HFT.”
— Eric Schneiderman (@AGSchneiderman) June 5, 2014
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