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The changes in electronic trading rules, if approved by the U.S. Securities and Exchange Commission, would eliminate some restrictions on large block trades being handled electronically.
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Today's super-fast algorithms and high speed electronic trading systems rule global market autobahns while the stewards (regulators) are still riding horses.
Rapid-fire electronic trading made the former rule obsolete, but given the extreme volatility and record trading volumes of recent weeks, and the significant decline in shares of major financial companies, regulators are reconsidering it.
Earlier this year, Cantor Fitzgerald moved to trade futures electronically, and in Europe electronic trading of derivatives is growing.
The S.E.C. also must move quickly to finalize proposed rules to regulate dark pools, electronic trading systems used by big investors to conduct large trades without going through a fully transparent exchange.
The company's core product is its TradeStation electronic trading platform, that enables traders to test and automate rule-based trading strategies (both technical and fundamental) across multiple asset classes.
It remains unclear whether regulators creating the new rules — on topics like transparency and possible electronic trading — will drastically change derivatives trading, or leave the bankers with great control.
JERRY_PUTNAM: I founded a broker dealer that got involved in offering electronic trading services to its customers and during that time a rule change that created the ECN category led me to start Archipelago.
Then the new boss must persuade the S.E.C. -- and the specialists at the exchange -- to agree to trading rules that will let the exchange continue to compete successfully in the electronic era.
The result of the new rules is likely to be a gradual increase in the amount of electronic trading on the NYSE and would help it retain market share compared to rival trading systems.
The plaintiffs in the CME lawsuit argue that the rule change they are fighting is part of a broader effort to cater to electronic trading and especially to high-frequency traders -- computerized trading firms that buy and sell stocks, bonds and derivatives by the millisecond or faster using computer algorithms.
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