UPDATE 1-SEC official sheds light on naked access proposals

* Regulator considering curbs on unfettered market access

* SEC considering who should be responsible for new rules

* Considering whether rules should apply pre or post-trade

NEW YORK, Nov 4 (Reuters) - The U.S. Securities and Exchange Commission will focus on who should be responsible for overseeing new rules for "sponsored naked access" to stock markets, and when those rules should be applied, as it develops proposals, an SEC official said on Wednesday.

The SEC is considering curbs to the practice where brokers allow trading firms to use their license, giving them unfettered access to markets. The firms, often high-frequency traders, are then able to shave valuable microseconds from the time it takes to trade stocks.

The SEC will focus on "who controls the controls," as well as whether the new risk controls should be applied before or after the trade is made, David Shillman, associate director of the regulator's trading and markets division, told a conference here.

Some exchanges, banks, and investors have raised concerns that naked assess is dangerous if a computer algorithm at one trading firm malfunctions, causing chaos for others in the market. Brokers and exchanges now use a patchwork of oversight rules to monitor naked access.

Shillman said the SEC would likely build on a proposal by Nasdaq Stock Market parent Nasdaq OMX (NDAQ.O: Quote, Profile, Research) for market-wide pre-trade standards. Nasdaq submitted its proposal nearly a year ago, and updated it as recently as last month. [ID:nN27236738] [ID:nN19367710] (Reporting by Jonathan Spicer; Editing by Tim Dobbyn)