This move can have several effects, one of which concerns a system of rebates and fees on trading orders.
The SEC wants to ban certain activities involving high frequency trading firms, including certain types of trading orders and certain ways they can access NYSE and other market centers.
Later, as a broker, Duffy stood on the top stair of the pit in an exchange-issued red trading jacket and filled orders.
The exchange's enforcement arm says JPMorgan inaccurately marked sell orders, submitted inaccurate trading data and transacted short sales without reasonable grounds to believe the stocks could be borrowed.
Matthew Lavicka, a managing director on Goldman's equities-trading desk and chairman of Sifma's trading and market structure committee, told the exchanges that he felt there was agreement among the majority of exchange customers: They couldn't safely be prepared for the NYSE contingency plan that involved routing orders away from the trading floor and to NYSE Arca in time for Monday morning.
Defenders of high-frequency trading, in which firms send waves of buy and sell orders into the market, often canceling them, say it makes trading more efficient and cheaper for everyday investors.
Computerized trading--much of it kicked into gear by algorithmic programs designed to cut large orders into tiny slices to find the best prices (see "Stealth Trading")--now accounts for more than half the volume on U.S. exchanges.
Until now, the exchanges have routed orders through a system called Intermarket Trading System.
It had been probed for front-running (trading for its own account before filling client orders) and separately found guilty of technical violations.
On August 1 a trading system malfunctioned at Knight resulting in erroneous orders sometimes multiplying trades 1, 000 times and flooding the market with orders.
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ISE's system eliminates the fees that a market-maker would charge and doesn't place size limits on trade blocks, making it appealing to the growing number of hedge funds and proprietary trading desks that use computer algorithms to send orders through an exchange.
As they did Tuesday, traders were asked to keep trading books open Wednesday after the close so excess orders could be filled and confirmed.
Plenty of companies are grappling with the aftermath of the storm, including Knight Capital, a trading firm that had to direct clients to reroute orders after its backup power system went down Wednesday.
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John Wheeler, senior manager of equity trading at American Century mutual funds, figures the current system imposes a 0.5% trading cost (one-way) on big orders, between commissions, spreads and the impact such orders themselves have on prices.
On Tuesday, floor traders wound up the day processing orders manually, using paper, pencil and in some cases white board to keep track of buy and sell orders, instead of using the electronic trading system that is supposed to be the show-piece of the hybrid model.
Despite warning signs that the Internet boom had gone too far, Cotsakos remained focused on stock-trading, which peaked at an average 308, 000 orders a day in April 2000, and kept up the juvenile ads.
Meantime, automatic trading programs bounced equities around, punishing good ones with sell orders to raise cash.
Last summer, Direct Edge was at the center of a controversy over so-called flash trading, in which users of its ECN are flashed unfilled orders for fractions of a second before those orders are routed out to rival exchanges.
Trading could start Wednesday with a flurry as investors with pent up orders rush to get their trades in, investors said.
Now, partly thanks to flash orders, Direct Edge is the third-largest stock trading platform by matched volume in the country, according to Raymond James.
The next generation of trading systems, however, will allow banks and brokers to route their orders through whichever network they choose.
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The day of Facebook's IPO, Nasdaq's systems got caught in a loop while lining up orders before the social-networking company's shares started trading.
The circuit-breaker restrictions apply to that stock on the next day of trading as well, and short sales would stand in line behind sell orders from other traders.
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Nasdaq is also battling competitive forces at home, including an upstart Kansas City electronic network known as BATS Trading, which has siphoned some 15% of the matched and routed orders from Nasdaq in its own listed shares.
Naturally, Goldman is in the process of trying to centralize all equity orders from every part of the firm, including its block trading desk and the division that services high net wealth clients, to increase its market share of all equities traded.
The Wall Street Journal says the Securities and Exchange Commission is looking into whether high-frequency trading firms are distorting prices by quote-stuffing, placing huge numbers of orders and canceling them.
Some 70% of all equity volume is driven by computer models that suddenly trigger a surge in buy or sell orders that are causing the fragmentation, volatility and use of hidden trading venues.
One of his first orders of business after taking over for Ricciardi three years ago was trading pitcher Roy Halladay to Philadelphia rather than pay him a huge free agent contract.
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As senior trader for MF Global, Grady runs an operation that executes orders for brokers in gold, silver and copper, as well as trading his own account.
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What looked to be a frightening rout was transformed suddenly and without the slightest advance warning into a huge rally as hundreds upon hundreds of gigantic buy orders, all 1 million shares or more in size, poured into electronic trading systems at Credit Suisse and several other major trading firms.
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