More on the SEC-CFTC flash crash recommendations. In short, they’ll force platforms that do not publicly display price quotes to execute orders better than the midpoint, or otherwise route them out. This would kill the business model for many registered ATS’s. The goal of greater transparency is good – but the unintended consequences are huge. To me sounds like trying to fix something that isn’t broken, but many disagree.
Heavy-handed enforcement of rules that challenge business models could prove counter-productive, adds Kevin McPartland, senior analyst at research firm TABB Group. “They motivate firms to change their behaviour rather than out-right banning practices,” he said. “The more that they ban, the more it will force the market to work out ways to run strategies or manage risk in a way that would mimic what they were doing before.”