Regulators: Ban Direct Access Trading

Discussion in 'Wall St. News' started by buzzy2, Aug 16, 2010.

  1. More regulations more rules more control more monitoring, blah blah where does it end?
    Don't they realize that their socialist regulations, monetary and fiscal policies cause crashes?
    Traders do not cause crashes.

    Global body urges tough rules for high-speed trade

    * Direct access to markets needs better oversight - IOSCO

    * Suggestions mirror U.S. proposals

    * High-frequency trading in the spotlight

    NEW YORK, Aug 13 (Reuters) - A global body of securities regulators proposed tough new guidelines to monitor high-speed trading firms that enjoy direct access to electronic exchanges.

    The hedge funds, proprietary firms and others that have "direct electronic access" (DEA) to securities markets should be monitored for risky practices both before and after their trades are made, the International Organization of Securities Commissions (IOSCO) said in a report.

    It also said brokerages that permit DEA are ultimately responsible for the impact DEA orders have on the marketplace, echoing muscular U.S. rules proposed early this year and meant to safeguard markets from trading errors or abuse. [ID:nN13155676]

    In direct access -- also called "sponsored" or "naked" access -- brokers approved to trade on an exchange rent their access badges to outside traders, who are then able to shave milliseconds off the time it takes to access markets.

    The practice has spread from North America and Europe over the past decade as markets increasingly went electronic, and as algorithmic high-frequency trading played a more central role.

    IOSCO suggested that brokers ensure their DEA clients meet minimum financial standards; that they identify the firms to regulators to bolster surveillance; and that markets that accept DEA be able to effectively limit trading if necessary.

    The eight principles set forth in the IOSCO report are guidelines for its member regulators. Direct access is now monitored by a patchwork of rules globally. (Reporting by Liana B. Baker and Jonathan Spicer; editing by John Wallace)
  2. hmm this makes me nervous. They better keep the "non HFT" people out of it. :mad:
  3. cstfx


    Where does it say "ban" direct access or are you just leaping to conclusions? Oversight does not equate to a ban.

    BTW, you forgot to add the pre-requisite 6 or 7 exclamation points in the thread title that usually accompanies similar chicken little claims.
  4. If trades have to go through vetting and supervision before they reach the exchange, it's no longer direct access....
    Brokers can send your order to limbo before they give their OK. Bottom line these rules can be gamed and guess what it's not the brokers or the banks, but hedge funds, independent and retail traders the ones getting the shaft.
  5. Yeah, they will let one of those crazy hedge funds and their 100 billion share sell order to go through in an instant, let your piddly emergency exit order hang forever at the same time.
  6. xtrader0


    The Securities and Exchange Commission ("SEC" or the "Commission") recently proposed new Rule 15c3-5, which would impose broad new requirements on broker-dealers that have direct trading access to Alternative Trading Systems ("ATSs") and securities exchanges.1 The proposed new requirements go far beyond the sponsored access rules of the various self-regulatory organizations
  7. the direct access they refer to has nothing to do with self directed traders.

  8. Since the biggest retail brokers like TD Ameritrade are not direct access, it will not affect many retail traders immediately, but it will affect some, for example those trading through leased exchange memberships.
    Everybody will be affected indirectly because liquidity will be slower to reappear after a violent move, so if anything, crashes will be more not less likely.
  9. LeeD


    The whole buzz is about unregulated entities, such as hedge funds, having unsupervised market access. If the new rule comes into force, larger funds will set up their one onshore brokerages to circumvent the rules. The music keeps playing.