Do Some Investors Have An Unfair Advantage?
July 25, 2009 by Mark Ellis
Filed under Business
According to New York Democratic Senator Charles Schumer, many of the more prominent Wall Street firms have a significant advantage over smaller firms because of their ability to access certain information more quickly. In order to alleviate this discrepancy, Schumer has called for federal regulators to keep a more vigilant eye on these firms.
In a letter addressed to the Securities Exchange Commission’s chairman, Mary Schapiro, Schumer encouraged the SEC to take action regarding this practice. Schumer also warned the SEC that if it would not be able to do anything to remove or mitigate the advantage, he would be forced to take legislative action and try to solve the problem through Congress.
Schumer’s complaint stems from what have become known as flash orders, which are purchases that allow firms to access stock exchange information seconds before the information is made public. Many firms can use that window of time to get an unfair advantage, buying and selling at better prices, especially with the use of high-tech computer software that can make these transactions nearly instantaneously.
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