The SEC has proposed to ban all unsupervised trading. This may be the end of retail trading as we know it. stay tuned http://www.businessweek.com/news/20...pervised-access-to-stock-market-update1-.html By Nina Mehta and Jesse Westbrook Jan. 13 (Bloomberg) -- The Securities and Exchange Commission voted to propose banning a practice in which brokers provide investors with unsupervised access to a stock exchange or alternative trading system. Chairman Mary Schapiro said so-called naked sponsored access, in which a customer bypasses the pre-trade controls of their brokers and access markets directly, may expose the market and firms that offer the service to too much risk. âWe 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,â Schapiro said at a hearing in Washington today. Commissioners are meeting in Washington today to begin formulating the next round of stock market regulation, focusing on strategies used by professional investors, such as sponsored access and âdark poolâ trading venues. The agency voted 5-0 to approve the proposal. Aite Group LLC, a financial services research firm in Boston, said in a December report that sponsored access represents about half of U.S. equities trading, with unfiltered access accounting for 38 percent. The SEC has been under pressure from Senator Ted Kaufman of Delaware and others to address concerns that so-called high-frequency trading firms could disrupt the market with trading that isnât properly monitored, such as through unfiltered market access. Jeopardizing a Firm
I think you'll find this a better assessment from Shogun Trading Interesting article on Bloomberg today that I think you all should be aware of. Basically, the SEC is moving to ban sponsored direct access trading. It sounds scary, but I think it will work to our advantage. There is a distinction between clients who receive direct access to the exchanges using the brokers infrastructure, such as individual traders like us, vs. firms who bypass the brokers infrastructure and use their own. In other words, firms who place their own servers in the same location as the broker itself will no longer be allowed to do so. These co-located servers used to account for 8% of market volume, but today they are closer to 40% of daily volume. That is a tremendous amount. These servers run sophisticated programs running arbitrage systems. In other words, a super high speed computer that takes advantage of the smallest possible moves in the market. Arbitrage exploits prices that are out of whack. In order for these systems to work, they must have extremely high volume, very low fees and minimal latency. By placing their servers with the broker, they are bypassing the broker's servers and thus reducing their latency. I believe that these arbitrage super systems have taken a lot of the swings out of the market. I don't think they added risk, as some of the regulators would say, I think they reduced the risk. Arbitrage plays ping pong with the market, not allowing it to really take off in either direction. I think once they remove these systems, the market will flow a lot better, much larger moves, even though volume will be lower. This decision will have a great effect on the market. It could cause lower volume, better moves, possibly higher costs of trading, larger spreads, but overall, much larger swings. For us traders, I think that's a good thing. The only part I worry about is the supposed protection of the investor. Remember when they put out the pattern day trader rules? When they made day traders have a minimum of 25,000 in their account? That was done in the name of protection. Notice these minimums do not exist in other markets, I wonder why. This protection of investors could get scary if they keep going with it. For example, if they come out and say that in the name of protecting investors, they will eliminate the ECNs, Electronic Execution Systems, to prevent the investor from having direct unsupervised access to the markets. I highly doubt that will happen, but will keep eyes open for that. In the mean time, I think this is a positive change and could really increase our profits soon. For example, instead of 10% average profit per trade, we can go back to 25% average profit per trade. Anyway, I think you should be aware of these changes as a trader. Here is the article: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aimlCbzLU9OY
"Naked Direct Market Access Trading - Say Goodbye" http://shares-stocks.suite101.com/article.cfm/naked_direct_market_access_trading_say_goodbye What is Naked / Unfiltered Direct Access Trading? The issue at hand is the ability of brokers to let customers use their MPID (market participant identifier code) to directly access, via a software platform, a trade network, such as a stock or futures exchange or a call market, ECN (electronic communication network) or other SEC-approved trading system, in order to get information or conduct transactions, a practice known as providing "naked" access or "unfiltered" access. SEC Seeks Risk Management Controls of Unfiltered DMA (Direct Market Access) Transactions According to the SEC, allowing this unscreened market access by traders, who in using the software may make mistakes on orders and who are not necessarily subject to federal securities laws and self-regulatory organizations (as brokers themselves would be), effectively presents a means to finagle or bypass said laws and regulations. Proposed are new requirements for broker-dealers that replace this type of use of direct market access trading systems. Broker-dealers can still allow a direct market access platform to traders under the new SEC rule. But once the new rule takes effect, it won't be "naked" or "unfiltered." -Guru
They want only firms like GS to have this access, while everyone else is locked out. We are heading closer and closer to a Facist corpoacracy.
Sensationalistic thread title. Source where the "SEC moves to ban all trading" Another 1 post douche.
This is not as life-changing as it sounds. What is proposed is stop market participants that are not exchange members themselves from sending orders directly to the exchange and bypassing broker checks regaring margin requirements, uptick rule etc. This won't affect retail traders as they are given "filtered" access anyway. This won't necessarily even affect traders using colocation as lots of colocated flow still goes via the broker. The only thing this means is market participants who need fast market access will have to properly register with the authorities and rent exchange membership. It's neither as expensive nor as difficult as it sounds.