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Eric Hunsader on Sex and Corruption Lawsuit at the SEC and HFT Jaywalking!
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Welcome to Capital Account. The Securities and Exchange Commission expanded an enforcement probe, reportedly intensifying scrutiny of stock exchanges. According to a Wall Street Journal article, federal securities regulators are increasing exchange oversight as they attempt to catch up to advantages that some allege have developed for sophisticated high-frequency traders. The probe has led the SEC to review how the exchanges develop new products, communicate with investors, and provide incentives to trade. According to the WSJ article, scrutiny of the SEC has increased partially due to its findings from a probe earlier this year when regulators looked into trading order types and the benefits for high frequency traders; order types can determine how much investors pay for shares and whether the order will move share price up or down. In addition to unfair advantages created by order types, there is concern that exchanges have given some firms increased insight into how their systems operate. We talk to Nanex Founder Eric Hunsader about the advantages for high frequeny traders and enforcement of regulations to make sure they follow the rules.
Also, Australia is clamping down on high frequency trading. Australian media outlets reported that federal officials announced changes to market rules, including mandatory 'kill switches' for algorithmic trading, to avoid a US style Flash Crash. We talk to Eric Hunsader of Nanex about where the US stands when it comes to HFT regulation and the merits of a kill switch.
And Lauren recently moderated the panel on the "Post-Election Economy" hosted by Mauldin Economics. The event featured John Mauldin, Bloomberg's Rich Yamarone, Pimco CEO Mohamed El-Erian, Barry Ritholtz and more. We play some highlights from the sidelines in today's "Loose Change."