(Adds more details from the speech)
By Sarah N. Lynch
WASHINGTON Oct 2 U.S. securities regulators are
launching a website to provide the public with extensive equity
market data, a move that will help shed light on high-speed
electronic trading and inform the heated debate over market
The Securities and Exchange Commission has been examining
complaints for years that high-frequency trading puts ordinary
investors at a disadvantage and should face new regulations or
High-speed traders, however, argue that they provide crucial
liquidity to the markets and are not disruptive.
Until just last year, the SEC did not have full access to
real-time trading data to help it make rules.
The new website, which goes live next week, will give the
public a limited view into this data that will allow a better
discussion about potential reforms, the SEC says.
"We expect this new tool to transform the debate on market
structure by focusing as never before on data, not anecdote,"
SEC Chair Mary Jo White said during a Security Traders
Association conference in Washington, D.C.
"With the click of a mouse, results will be available in
clear, easy-to-read charts and graphs."
White said during her confirmation hearing earlier this year
that market structure matters and an examination of issues
surrounding high-frequency trading would be one of her main
The SEC's new market data website will give the public the
ability to examine in detail the various quotes, cancellations
and executed trades that flood the country's 13 exchanges.
The site can be used to measure how quickly orders were
filled or compare how often orders that entered the market were
actually executed and how many were canceled.
Initially, the site is expected to be updated quarterly,
although the SEC envisions more frequent updates in the future,
an SEC spokesman said.
The data on the SEC's website, while voluminous, represents
just a snapshot of the billion records the SEC receives each day
through its new system, known as Market Information Data
Analytics, or MIDAS, which began operating fully in January.
MIDAS gives the SEC a real-time way to collect and analyze
all of the quote and trading data from the public tapes for
equities and options, and from the same proprietary data feeds
that high-frequency traders use.
The MIDAS system itself was developed by Tradeworx, a
high-frequency trading firm based in Red Bank, New Jersey.
SEC SEEING TRENDS
The SEC for years has been under pressure to make equity
market structure reforms, especially in the wake of the May 6,
2010, "flash crash" in which the Dow Jones Industrial Average
plunged more than 700 points before rebounding.
Although regulators later determined that high-speed traders
were not directly to blame for the event, it sparked a broader
debate about their role in the markets and whether their
practice of rapidly cancelling trades to test for market
interest was adversely impacting ordinary investors.
Some experts have called for reforms such as charging firms
for the high level of message traffic that they claimed was
flooding the market and burdening the exchanges, an idea the SEC
has yet to take up.
White said on Wednesday that data reviewed by the SEC show
that high-speed traders are not cancelling trades for orders on
corporate stocks as often as people suspected.
"Though we can clearly see that quotes are sometimes
canceled within a millisecond or faster, the data show that the
high-speed market is not dominated by such cancellations," she
said. "In fact, over a quarter of all exchange-based trades in
corporate stocks are executed against orders that have rested
for only half a second or less."
On the sidelines of Wednesday's event, White declined to say
how the new data on trade cancellations could impact rule
"I think the key is we not get ahead of ourselves," she
said. "What we now have is the data and we want the feedback on
White also broadly outlined a few other issues she hopes the
SEC will address.
She supports a pilot program to allow smaller companies to
use wider "tick sizes," or the minimum pricing increment that
can be used to trade securities.
She also said the SEC needs to scrutinize whether the
current regime of requiring for-profit exchange operators such
as Nasdaq and NYSE Euronext to also police their own
markets as self-regulatory organizations is truly working.
"This evaluation should include whether the current exchange
regulatory structure continues to meet the needs of investors
and public companies," she said. "Does it provide sufficient
flexibility for exchanges to implement transparent trading
models that can effectively compete for investor orders?"
(Reporting by Sarah N. Lynch; Editing by Karey Van Hall, Leslie
Adler and Andre Grenon)