The head of the U.S. Securities and Exchange Commission unveiled the agency's strongest plan yet for reining in high-frequency trading in the world's largest equity market, Bloomberg reported.
Proprietary traders who use automated strategies and are now exempt from SEC oversight would have to register with the agency and comply with its rules, SEC Chair Mary Jo White said today in a speech in New York.
The SEC is also developing safeguards to restrain aggressive trading that might lead to extreme price swings as other traders withdraw from the market, she said.
White is trying to add transparency to an industry that has accounted for as much as two-thirds of U.S. stock trading while operating outside of public view and often beyond the scrutiny of regulators. High-frequency traders, who have been linked by Michael Lewis's book "Flash Boys" and others to everything from the flash crash of May 2010 to market volatility during the European debt crisis, would face new rules to address practices that critics say have disadvantaged market participants.
"We have taken important steps to further strengthen the investing environment," White said in remarks to the Sandler O'Neill and Partners Global Exchange and Brokerage Conference. "As we move forward to the next phase of our efforts to enhance our market structure, I am recommending additional measures to further promote market stability and fairness, enhance market transparency and disclosures and build more effective markets for smaller companies."