newdigital

Flash Boys are getting put into the slow lane.

The Securities and Exchange Commission adopted new rules to keep exchanges and so-called “dark pools” safer by requiring more safeguards — a shift that will put more regulation on high-frequency trading platforms.

The rules come about eight months after the publication of “Flash Boys,” a book by Michael Lewis that argued that some tech-savvy brokers rig the stock market by taking advantage of the fastest trading technology.

The new rules, officially called Regulation Systems Compliance and Integrity, or Reg SCI, require more cybersecurity and backup systems, as well as more reporting to the SEC during market disruptions.

They affect exchanges like the New York Stock Exchange and the lightly regulated dark pools, like Credit Suisse’s Crossfinder system.
“The [SEC] simply cannot adequately exercise its oversight over market-impacting issues in the complex, high-speed systems of 2014 using a dated — and voluntary — framework,” SEC Chair Mary Jo White said in a statement.

The new rules are also aimed at preventing market mishaps, like Nasdaq’s botched Facebook IPO in May 2012.
Companies have almost a year to comply with the new rules, the SEC said.

The rules were first proposed in March, but were pushed back after being criticized by some commissioners as too broad.
Kara Stein, one of the SEC’s commissioners, argued that the new rules don’t go far enough in making the trading venues more transparent.
“We should be doing more in this rule,” Stein said in a statement. “I am disappointed in this missed opportunity because so many important trading centers are left out.”

the source