SEC to Review Stock Trading Rules, Potential Shakeup Ahead

SEC to Review Stock Trading Rules, Potential Shakeup Ahead

$DIA, $SPY, $QQQ, $RUTX, $VXX

FLASH: Major averages recouped most of their losses and close near session highs

The Securities and Exchange Commission (SEC) is launching a review of the main set of rules governing stock trading, opening the door to the biggest potential changes in 15 yrs the head of the agency said Friday.

The possible changes are aimed at making it easier to trade illiquid stocks, making more trading information available to investors, and improving the speed and quality of public data feeds needed for trading.

The SEC in Y 2005 adopted a broad framework called Regulation National Market System that was largely aimed at ensuring retail investors get the best price possible and preventing trades from being executed at prices that are inferior to bids and offers displayed on other trading venues.

Since then, faster, more sophisticated technology has put a bigger focus on rapid-fire, high-speed trading. There has also been an influx of new electronic stock exchanges, fragmenting liquidity and increasing costs for brokers around exchange connectivity and market data needed to fuel algorithmic trading.

“It is clear that the market challenges we faced in the early 2000s are not the same as the issues that we confront over a decade later,” the Chairman of the SEC, said at an event in New York.

The SEC held a series of Roundtable discussions with industry experts last year that led to potential rule-making recommendations around thinly-traded securities, combating retail fraud, and market data and market access.

Some areas the SEC is looking at include:

  • Increasing the speed of, and adding more stock price information to, public data feeds to help make them more competitive against the more expensive, private data feeds sold by most stock exchanges.
  • Allowing thinly-traded securities to trade only on their listing market, rather than on all 13 US stock exchanges.
  • Improving disclosure around reverse mergers.
  • Adjusting the quote size of some high-priced stocks.

The Commission adopted rules to increase transparency around broker-dealer stock order routing and private off-exchange trading venues. It also ordered a pilot program to test banning lucrative rebate payments that exchanges make to brokers for liquidity-adding stock orders.

Friday, the major US stock market indexes finished at: DJIA 22.99 at 25450.24, NAS Comp -13.32 at 7408.16, S&P 500 -5.86 at 2743.03

Volume: Trade on the NYSE came in at 816-M/shares exchanged

  • Russell 2000 +12.9% YTD
  • NAS Comp +11.7% YTD
  • S&P 500 +9.4% YTD
  • DJIA +9.1% YTD

HeffX-LTN’s overall technical analysis for the major US stock market indexes is Bullish for the week ended 8 March 2019

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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