From the Australian Financial Review:
ASIC poised to clamp down on HFT
The Australian Securities and Investments Commission has threatened to introduce clamps on super-fast computer trades to reduce their speed if the controversial practice continues unchecked.The AFR was kind in not pointing up ETF's and money management as reasons for the departure of individual investors from individual securities and from the exchanges.
The proposal to slow down trades is inspired by United States exchange IEX, which United States author Michael Lewis holds up in his new book as the country’s only “fair exchange”.
The clamps pause trades for half a second before being executed in an effort to take away the speed advantage for HFT traders.
The ASIC has told David Murray’s financial services inquiry that investors are concerned the markets are rigged and will “walk away” if high-frequency traders continue to skim their profits.
“If people can’t have trust and confidence in the market, then you don’t have a market,” ASIC chairman Greg Medcraft told The Australian Financial Review. “The strength of the market is reflected in how many retail investors you have. If you discourage real buyers, then markets become trading for trading’s sake, rather than serving the real economy.”....MORE
RE quote stuffing I keep coming back to the Exchange Act:
Securities Exchange Act of 1934, Section 9 -- Manipulation of Security Prices
a. Transactions relating to purchase or sale of security
It shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange--
- For the purpose of creating a false or misleading appearance of active
trading in any security registered on a national securities exchange, or a
false or misleading appearance with respect to the market for any such
security, (A) to effect any transaction in such security which involves no
change in the beneficial ownership thereof, or (B) to enter an order or orders
for the purchase of such security with the knowledge that an order or orders of
substantially the same size, at substantially the same time, and at
substantially the same price, for the sale of any such security, has been or
will be entered by or for the same or different parties, or (C) to enter any
order or orders for the sale of any such security with the knowledge that an
order or orders of substantially the same size, at substantially the same time,
and at substantially the same price, for the purchase of such security, has
been or will be entered by or for the same or different parties.
- To effect, alone or with one or more other persons, a series of transactions in any security registered on a national securities exchange or in connection with any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
