The Chicago Board Options Exchange has told the US Securities and Exchange Commission that it “strongly opposes the elimination of flash trading for options,” as the practice “greatly benefits long term retail investors.”
The CBOE’s chairman and chief executive, Bill Brodsky, wrote to the SEC on November 18, setting out the CBOE’s opposition to a ban on the controversial technique allowed by some financial exchanges.
Flash trading allows some market participants to see incoming orders to buy or sell shares or options very slightly earlier than general market participants, in exchange for a fee. The CBOE’s flash trading period lasts 150 milliseconds.
Critics of the practice contend that it creates a two tier market in which one class of traders can unfairly exploit others.
The practice has come under regulatory scrutiny in the wake of the global financial crisis – both the SEC and the UK Financial...