State regulators urge Congress to probe high-frequency trading
State securities regulators on Tuesday urged Congress to investigate the practice of using powerful computers to trade rapidly large volumes of securities.
The practice, known as high-frequency trading (HFT), can put retail investors at a disadvantage since they generally do not have access to the same information and often buy and sell at less favorable prices, according to the North American Securities Administrators Association (NASAA).
NASAA, a Washington-based organization of state securities regulators, made its appeal during a news conference at the National Press Club in the U.S. capital.
The HFT appeal is part of NASAA's legislative agenda for this year, which also includes calls for bolstering funding to the U.S. Securities and Exchange Commission by collecting examination fees for advisers it oversees.
The group also wants Congress to strengthen investor protections it says were weakened by the JOBS Act, a law intended to make raising capital easier for small businesses.
NASAA called for legislation that would empower state regulators to curb the use of mandatory agreements between registered investment advisers and their clients that require arbitrating potential legal disputes instead of going to court.
Those agreements are becoming more common among investment advisers and clash with their ethical responsibilities to act in their clients' best interests, NASAA said.
The measures overall aim to help retail investors and businesses recover from a difficult economic climate, said NASAA President Heath Abshure, who is also Arkansas securities commissioner.
(Reporting by Suzanne Barlyn in New York; Editing by Chelsea Emery and Dale Hudson)