Getting your player ready...
WASHINGTON — The Securities and Exchange Commission voted Wednesday to bar brokers from granting traders unfiltered access to an exchange or trading venue, a move aimed at preventing a trading error from causing a severe market disruption.
“Naked access” lets traders buy and sell stocks on exchanges using a broker’s computer code without requiring them to filter through the broker’s systems or undergo any pre-trade checks.
Such trading arrangements have exploded with the growth of high-frequency-trading firms, which often don’t want to be bogged down by a broker’s controls. In some cases, brokers rely on assurances from traders that they have their own controls in place.
