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ARTICLE · 20 NOVEMBER 2014

Regulators Continue To Address High-Frequency Trading

Proskauer Rose LLP
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For the foreseeable future, the financial community can continue to expect additional regulatory interest in high-frequency and other algorithmic trading.

United StatesCorporate/Commercial Law
Harry Frischer
Harry Frischer
Brian Friedman
Brian Friedman
Stephen Ratner
Stephen Ratner
Boris Zeldin
Boris Zeldin
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Regulators across markets continue to show interest in high frequency trading and algorithmic trading generally. Recent developments in this area include:

  • On October, 16, 2014, the SEC imposed a $1 million sanction on a high frequency trading firm, Athena Capital Research, which allegedly placed large numbers of rapid-fire orders in the final two seconds of trading to manipulate the closing prices of thousands of NASDAQ-listed stocks. According to the settlement documents, the trading algorithm, code-named "Gravy," purportedly allowed Athena to overwhelm the market's available liquidity at the close, and artificially move the market in Athena's favor.
  • A high-frequency commodities trader was indicted in the Northern District of Illinois on October 1, 2014, and charged with using high-speed computerized trading algorithms to manipulate the market in various commodities. This appears to be the first criminal prosecution involving electronic "spoofing," i.e. the

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