In a rare recent demonstration of legislative impetus toward increased regulatory oversight of markets Senator Kaufman of Delaware has sent a letter to the Securities and Exchange Commission asking them to review all forms of stock-market structure. In particular his request for a review focuses on the enormous amount of trades that happen as part of “high-frequency trading” and that happen privately without regulatory oversight.
While a bit off-target in terms of what I would like to see Congress focus on, the public nature of this request indicates that there is still some interest in regulatory overhaul of the financial markets – a good thing. Kaufman is primarily interested in the discrepancy that may exist between prices secured by big institutional investors that high-frequency trade and who trade off-exchange vs. the little guy. As you all know I would like to see Congress focus on new regulations that increase the transparency of markets. Kaufman’s call for a review touches on some of these issues.
The SEC is yet to respond formally to the letter. Let’s hope that they begin to make changes in regulations that increase their ability to police markets so that some of the chaotic and intense moments of the last 18 months do not repeat themselves.
Jason
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