FIA PTG submitted comments to the Securities and Exchange Commission (SEC) today on the Commission's Proposed Interpretation Regarding Automated Quotations Under Regulation NMS and to further comment on IEX's amended application for registration as a national securities exchange.
In the Proposed Interpretation, the Commission stated that it “preliminarily believes that, in the current market, delays of less than a millisecond in quotation response times may be at a de minimis level that would not impair a market participant’s ability to access a quote, consistent with the goals of Rule 611 and because such delays are within the geographic and technological latencies experienced by market participants today.”
We believe that the Proposed Interpretation would have multiple negative consequences for the equity markets. The Proposed Interpretation could lead to multiple exchanges implementing different kinds of delays. Combined with the Regulation NMS (“Reg NMS”) requirement to route orders to the apparent best price, this risks turning the national market system into a hall of mirrors where it’s impossible to know which prices are real and which are latent reflections.