Raft Of High-Frequency Trading Probes Under Way

Apr 2 2014 | 10:54am ET

U.S. regulators have high-frequency trading in their sights—plural.

The Federal Bureau of Investigation, Securities and Exchange Commission and Commodity Futures Trading Commission are all investigating the practice, which is employed by a number of hedge funds. Indeed, SEC Chairman Mary Jo White said yesterday that her agency has “a number” of ongoing HFT investigations that have been going on for “quite some time.”

“We’re very much focused on any abuses in that space,” she told a House of Representatives subcommittee.

The SEC and CFTC are investigating ties between high-speed traders and exchanges, which often allow such traders to co-locate their servers at exchange sites, shaving milliseconds from the time it takes information to reach their computers in exchange for a fee. The FBI is looking into whether any HFT practices violate insider-trading laws.

The increased scrutiny on HFT comes in the wake of author Michael Lewis’ new book on the subject. Lewis argues that the practice has rigged U.S. stock markets and should be barred.


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