Flash Boys are getting put into the slow lane.
The Securities and Exchange Commission adopted new rules to keep exchanges and so-called “dark pools” safer by requiring more
safeguards.
The rules come about eight months after the publication of “Flash
Boys,” a book by Michael Lewis that argued that some tech-savvy brokers
rig the stock market by taking advantage of the fastest trading
technology.
The new rules, officially called Regulation Systems Compliance and
Integrity, or Reg SCI, require more cybersecurity and backup systems,
as well as more reporting to the SEC during market disruptions.
“The [SEC] simply cannot adequately exercise its oversight over
market-impacting issues in the complex, high-speed systems of 2014
using a dated — and voluntary — framework,” SEC Chair Mary Jo White
said in a statement.
The new rules are also aimed at preventing market mishaps, like Nasdaq’s botched Facebook IPO in May 2012.
Companies have almost a year to comply with the new rules, the SEC said.
Kara Stein, one of the SEC’s commissioners, argued that the new rules
don’t go far enough in making the trading venues more transparent.
“We should be doing more in this rule,” Stein said in a statement. “I
am disappointed in this missed opportunity because so many important
trading centers are left out.”