FIA PTG submitted a comment letter to the Securities and Exchange Commission (SEC) today in response to a proposal from the Chicago Stock Exchange, Inc. (CHX) to introduce a new type of speed bump, the Liquidity Taking Access Delay (LTAD).
FIA PTG opposed the proposal, commenting that, “the LTAD can be thought of as CHX giving certain market participants the ability to travel up to 350 microseconds back in time, allowing ‘time travelling’ traders to change their minds about their willingness to trade based on information gained in the future.”
FIA PTG expressed concerns with the IEX exchange application earlier this year, and reiterated arguments against speed bumps in this letter, “We believe that allowing intentional delays of protected quotes not only contradicts the language of Reg NMS, but also creates troublesome distortions in US equity market structure.” Although the SEC approved IEX’s application, the CHX proposal is different from IEX’s speed bump, in that it would not apply to all order and cancellation messages equally. The LTAD would apply only to marketable orders, and not to resting orders or cancellations.
“Many of our members might be in a position to benefit from the LTAD,” FIA PTG noted in its comments. “However, we believe that it would be a negative development for U.S. equity market structure, add unwarranted complexity, and create a bad precedent for this and other types of discriminatory artificial delays.”