Defaulting banks - where will it stop?

[Jan Klimkowski]

This piece of "breaking news" fits the dictionary definition of a limited hangout by the financial elites.... :bandit:

Washington (AP) -- Federal regulators are proposing tighter
oversight for so-called "dark pools," trading systems that
don't publicly provide price quotes and compete with major
stock exchanges.
The Securities and Exchange Commission voted to propose new
rules that would require more stock quotes in the "dark pool"
systems to be publicly displayed. The changes could be adopted
sometime after a 90-day public comment period.
The alternative trading systems, private networks matching
buyers and sellers of large blocks of stocks, have grown
explosively in recent years and now account for an estimated
7.2 percent of all share volume. SEC officials have identified
them as a potential emerging risk to markets and investors.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further
information. AP's earlier story is below.

WASHINGTON (AP) -- Federal regulators considered tighter
oversight Wednesday for so-called "dark pools," trading systems
that don't publicly provide price quotes and compete with major
stock exchanges.
The Securities and Exchange Commission was expected to
propose new rules that would require more stock quotes in the
"dark pool" systems to be publicly displayed.
The alternative trading systems, private networks matching
buyers and sellers of large blocks of stocks, have grown
explosively in recent years and now account for an estimated
7.2 percent of all share volume. SEC officials have identified
them as a potential emerging risk to markets and investors.
The SEC initiative is the latest action by the agency
seeking to bring tighter oversight to the markets amid
questions about transparency and fairness on Wall Street. The
SEC has floated a proposal restricting short-selling -- or
betting against a stock - in down markets.
Last month, the agency proposed banning "flash orders,"
which give traders a split-second edge in buying or selling
stocks. A flash order refers to certain members of exchanges --
often large institutions -- buying and selling information
about ongoing stock trades milliseconds before that information
is made public.
Institutional investors like pension funds may use dark
pools to sell big blocks of stock away from the public scrutiny
of an exchange like the New York Stock Exchange or Nasdaq Stock
Market that could drive the share price lower.
"Given the growth of dark pools, this lack of transparency
could create a two-tiered market that deprives the public of
information about stock prices," SEC Chairman Mary Schapiro
said at the agency's public meeting Wednesday.
When investors place an order to buy or sell a stock on an
exchange, the order is normally displayed for the public to
view. With some dark pools, investors can signal their interest
in buying or selling a stock but that indication of interest is
communicated only to a group of market participants.
That means investors who operate within the dark pool have
access to information about potential trades which other
investors using public quotes do not, the SEC says.
The SEC proposal would require indications of interest to
be treated like other stock quotes and subject to the same
disclosure rules.
A 1999 SEC rule established a separate set of regulations
for alternative trading systems, which have grown to 29 from 10
in 2002. Examples include: London-based Turquoise Trading Ltd.,
a European system established by Citigroup Inc., Goldman Sachs
Group Inc., France's Societe Generale SA and other major banks;
Toronto-based Alpha was set up by several major Canadian banks;
and Liquidnet Inc. in New York.
NYSE chief executive Duncan Niederauer has asked the SEC to
subject the alternative systems to a stricter set of
regulations that is closer to the regime for the major
exchanges. His proposed changes would go further than those
being considered by the SEC.
"We are not against dark pools," Niederauer said Tuesday in
a conference call with reporters. "We're in favor of
competition; we'd just like it to be a level playing field."
Sen. Charles Schumer, D-N.Y., sent a letter to Schapiro
asking the SEC commissioners to consider stricter regulations
for the trading systems as well as establishment of a
consolidated surveillance system for all markets, for which the
alternative systems would contribute some of the cost.


-0- Oct/21/2009 15:38 GMT