“The New York attorney general, Eric T. Schneiderman, is expanding his crackdown on the high-frequency traders that dominate financial markets.

“Mr. Schneiderman announced on Tuesday that he was scrutinizing services that allow fast traders to profit on important information before other investors even see it. He urged regulators and stock exchanges to curb some of these practices, which help foster what he terms “insider trading 2.0.”
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The attorney general has zeroed in on the exchanges, including the New York Stock Exchange and Nasdaq, that permit high-frequency traders to pay to put their computer servers within the exchanges’ data centers. The practice, known as co-location, shaves milliseconds off the time it takes them to receive market information.

“A number of other services provided by exchanges to high-frequency traders, including extra network bandwidth, special switches and fast connection cables, are also being examined by Mr. Schneiderman, who said the services gave the traders a “leg up on the rest of the market.”

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