The US Securities and Exchange Commission (SEC) has revealed plans to introduce regulations to control high-volume, high-speed traders.
The proposed regulations will help control the digital trading market, and similar rules are likely to be introduced in the UK at a later date.
The SEC wants to stop problems caused when high-volume, high-frequency traders are given what is known as "naked access" to stock exchanges and alternative trading systems by their broker-dealers.
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Broker-dealers charge their large clients, such as hedgefunds, to use their trading infrastructures. This means the trades do not go through the broker-dealer's controls and can get out of hand.
The SEC wants to introduce rules that force broker-dealers to put in place mechanisms to control their clients' trades.
SEC chairman Mary Schapiro said controls are essential. "We are concerned that order entry errors in this setting could suddenly and significantly make a broker dealer or other market participants financially vulnerable within mere minutes or seconds."
She said unfiltered access is like giving your car keys to a friend who doesn't have a licence and letting him drive unaccompanied. "Today's proposal would, in short, require that if a broker-dealer is going to loan his keys, he not only must remain in the car, but he must also see to it that the person driving observes the rules before the car is ever put into drive."
The UK is likely to follow suit when the Markets in Financial Services (Mifid) legislation is reviewed this year, said PJ Di Giammarino, CEO at financial services think-tank JWG-IT. "This is the regulators trying to catch up with the market."