By Rachelle Younglai and Jonathan Spicer
WASHINGTON/NEW YORK, Jan 13 (Reuters) – U.S. securities regulators took their first stab at deciding whether rules are needed to curb high-frequency traders, whose lightning-fast computer programs now dominate equities markets.
In a move that could overhaul how markets function, the Securities and Exchange Commission voted on Wednesday to seek public comment on the rapid trades, the anonymous trading venues known as dark pools, and other market developments that have blossomed over the last decade.
The SEC will publish a so-called concept release asking whether the current structure of markets is fair to investors and whether they have the tools to protect their interests.
“The equity markets have undergone extraordinary change,” said SEC Chairman Mary Schapiro. “At the commission, we must continually assess how changes in the market are affecting investors.”
The 60-page document asks whether high-frequency traders — the proprietary firms, banks and hedge funds that use sophisticated algorithms to make markets and profit from tiny imbalances — present systemic risk.