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U.S. regulator rejects Nasdaq plan to offer algorithmic trading

Jan 15 2013 John McCrank, Reuters

Nasdaq OMX Group Inc's proposal to offer algorithmic trading services that would compete against similar services offered by broker-dealers has been denied by a U.S. regulator. The exchange operator did not prove it would not have a competitive advantage over broker-dealers offering similar products if its proposal was granted, the U.S. Securities and Exchange Commission said in a filing dated Jan. 11. The SEC also highlighted other concerns, including the need for appropriate risk controls for the algorithmic orders, which electronically execute large stock orders over a specific time for specific securities and are generally aimed at institutional investors. A spokesman for Nasdaq declined to comment on the matter. On May 1, Nasdaq proposed a rule change to the SEC that would allow the exchange to offer three algorithmic order types, aimed at achieving the performance of specific benchmarks: volume weighed average price, time weighted average price and percent

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