SEC is a Security Exchange Commission. High Frequency Trading is trading, which allows to perform a huge number of transactions in a short period of time using the hardware (computer) tools. It is also called HFT. Recently, this type of trading has become so popular that trading volume fell sharply on New York Stock Exchange. From 50% to 70% of all transactions are being made by high-frequency traders. The profitability of HFT is obvious. For example, Flamanta (flamanta.com) is one of the first HYIPs that officially engaged in HFT and it offers 1.72-1.92% daily!
So, HFT has long been a bone in the throat for SEC, which regulates financial markets. The thing is that not only the volume of trade decreases, but the rules of game change as well. According to many large investors, trading is turning into casino. Not surprisingly, that this has become a subject for discussions in media. In early September, Mary Shapiro, the head of the Commission on Financial Markets and Exchange stated that the regulators intend to change the rules regarding the obligations of market participants. SEC is trying to think of possibility of introducing a rule which would require a minimal time to set prices.
We can only guess how this will affect the high-yield industry and representatives of the HFT on the market in particular. However, Flamanta is in a positive mood and that's what they think about this situation:
"We are fully aware of the discussions in Bloomberg, Forbes and other media sources, but the question of HFT regulation is not new. At the initial stage of our company inception we consulted lawyers, traders and members of the Economic Club of New York about HFT prospects. We should say that experts have a common view that HFT is not facing a possible ban, instead it will likely be regulated so that it could be easier for the government to oversee this trading industry.
It is evident today that HFT technologies are used by the largest international financial companies who lobby their interests in US Congress and SEC. Hence, world's top financial tycoons will oppose the ban of the most profitable trading sector in the 21st century.
Still, our company has taken into account all possible scenarios for HFT even the most negative ones. The point is that many European and Asian exchanges support High Frequency Trading which means that in case SEC imposes a bar on HFT we, as well as the other players, will move to other exchanges. Such companies as Goldman Sachs and Merrill Lynch have too high turnovers and they may gain over significant returns to other exchanges, and our medium-size trading company, as a result, will continue making fortunes. However, it is apparent that neither SEC nor US Congress will let HFT die in their America because the industry means taxes and liquidity of many American companies. Therefore, we have a positive outlook for HFT, and we would like to thank Mary Schapiro (Chairman of SEC) for her attracting great attention to HFT and her efforts to enter regulatory standards for this business which will make it even more popular. "
- James Troutman told us in an official commentary.