No high-frequency crackdown in SEC blueprint for control

WASHINGTON: Mary Jo White’s blueprint for imposing tighter controls on high-frequency traders and some of the murky venues they inhabit stops short of a crackdown.

The US Securities & Exchange Commission’s plan, unveiled by White in a speech this week, advanced some new ideas while borrowing heavily from existing proposals and measures that already have support on Wall Street. While stock exchanges, rapid-fire traders and private trading venues known as dark pools all would come under new scrutiny, White didn’t embrace the kind of tighter restraints that have been enacted in countries such as Australia and Canada.

White isn’t acting in a vacuum. She is responding to political pressures raised by an investigation by the New York attorney general into whether speed traders prey on slower-moving investors as well as a book by Michael Lewis, “Flash Boys,” that condemned the role of exchanges and brokers in enabling unfairness. She announced the initiatives even as she said U.S. markets aren’t rigged and serve the goals of retail and institutional investors.

“It makes sense given the current public debate over Flash Boys to point out what the SEC is doing,” said James J. Angel, a finance professor at Georgetown University whose research focuses on equity markets and regulation. “A lot of this stuff has been in the pipeline, but it’s good to get the message out that, hey, we’re on the beat.”

The plan includes two rules already in development, including one that would require exchanges and some dark pools to build better protections against technology outages and failures.