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The large-trader tagging and consolidated audit-trail
proposals are likely to be approved by the commission over the
coming months. Although its wishful thinking to expect
the SEC to ever be able to match the technological
sophistication of high frequency traders, the new rules should
eventually give the regulator the necessary tools to monitor
and police their activity. Im sure that is going to make
some high frequency traders very nervous, but they
shouldnt be. Unlike some of the more vocal critics of
high frequency trading, SEC chairman Schapiro knows that the
technological clock cannot be turned back.
While technology has provided benefits to the market,
it has also created real issues, she told me in early
May. We want to be very careful and thoughtful about how
we approach it. The idea that you can say, Lets
just unplug everything or Lets put something
into the machines that makes everything go slower is
probably not realistic.
In other words, in the battle of man versus machine, both
sides could end up winning.