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June 17, 2016

Combating Markets Rigged By Predatory HFT, IEX’s Exchange Approval

FOR IMMEDIATE RELEASE
Friday, June 17, 2016
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com

Washington, D.C. – Dennis Kelleher, President and CEO of Better Markets, issued this statement on the vote today by the Securities and Exchange Commission approving IEX’s application to establish a formal stock exchange:

“Today’s fragmented equity capital markets are too often rigged by predatory high frequency trading (HFT) practices that rip off investors and destabilize the markets.  By taking away the HFT predators’ unfair advantages, the Investors’ Exchange (IEX) levels the playing field and aligns the markets once again with the interests of long-term investors rather than millisecond traders.  We congratulate IEX for fearlessly taking on the powerful, connected, embedded HFT industry and winning against the odds.  We also applaud the SEC for approving this private sector solution to a very serious public problem.

“The SEC, however, must do more.  It must stop the mindless race among HFT firms for the latest technological gimmick and the fastest speed in an endless predatory quest to get in front of and exploit investors’ orders.  The capital markets are supposed to be engines for the country’s economic security, opportunity and prosperity, not gambling casinos for insiders to unjustly enrich themselves at the expense of the investing public.  Rigged markets kill jobs and growth while crushing investors’ confidence and depriving America’s companies of the capital they need.

“The SEC should immediately prohibit maker-taker or, at a minimum, approve a pilot program.  It must also outlaw the selling of privileged access to investor trades, require a fairer order routing system, mandate transparency in dark pools, ban complex order types and fees generated by conflicts of interest, and generally de-fragment and simplify the current market structure.  The Enforcement Division must bring more cases against manipulative practices and illegal conduct.  The Office of Compliance Inspections and Examinations must proactively review algorithmic and artificial intelligence-based trading to make sure these programs do not cause another ‘Flash Crash’ or worse.  Reducing technological threats, abuses and crimes that jeopardize investors and markets must be at the top of the SEC’s priorities.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

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