Financial Regulatory Forum

US SEC proposes “effective” ban on naked access

By Rachelle Younglai and Jonathan Spicer

WASHINGTON/NEW YORK, Jan 13 (Reuters) – U.S. securities regulators proposed rules on Wednesday that would require more supervision of unlicensed high-frequency traders who gain unfettered, or “naked,” access to public markets.

The Securities and Exchange Commission voted for a proposal that would require brokerages that rent out their access to the markets to have rules in place to protect against potential mishaps from unlicensed traders.

In the practice known as “sponsored” access, brokerages that have been approved to trade on an exchange rent their access to traders, who are then able to shave milliseconds from the time it takes to access the markets.

In “naked sponsored” access, also called “unfiltered” access, the brokers do not screen orders en route to markets, making electronic trading even faster.

“We 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,” said SEC Chairman Mary Schapiro.

US SEC mulls plans to safeguard naked market access

By Rachelle Younglai

WASHINGTON, Jan 12 (Reuters) – U.S. securities regulators are mulling a proposal that would require more supervision of unlicensed traders who gain unfettered access to public markets, two people familiar with the plan said on Tuesday.

Regulators are considering a proposal that would require brokerages that rent out their access to the markets to have rules in place to protect the markets against potential mishaps from unlicensed traders, the two people said.

The practice known as “naked” access or “sponsored” access, is when brokerages that have been approved to trade on an exchange rent their access to traders who are then able to shave milliseconds from the time it takes to access the markets.

US SEC seeks to curb “naked access,” expose fast trades

U.S. Securities and Exchange Commission Chairman Mary Schapiro testifies before the Senate Banking Committee on Capitol Hill in Washington, June 22, 2009.  (File Photo)  REUTERS/Jim Young    (UNITED STATES POLITICS BUSINESS)  By Elinor Comlay
NEW YORK, Oct 27 (Reuters) – The top U.S. securities regulator said she was looking for ways to crack down on “naked access,” the practice of brokers giving high-frequency traders unfettered access to public markets.

Securities and Exchange Commission Chairman Mary Schapiro said on Tuesday that she had concerns with sponsored naked access, where brokerages that have been approved to trade on an exchange rent their access to clients who are able to shave milliseconds from the time it takes to access the markets.

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