SEC Proposes Biggest Trading Reforms in Decades
The U.S. Securities and Exchange Commission (SEC) on Wednesday proposed changes in how stocks should trade, representing the most far-reaching shake-up of Wall Street’s foundation in decades. One rule would require stockbrokers and the wholesale market makers to submit to auction orders sent by an individual seeking to buy or sell stock at whatever is the currently-quoted price, as long as the trade totals less than $200,000 and the individual averaged fewer than 40 orders a day in the previous six months. Another proposed rule would allow stock exchanges to execute trades at price increments smaller than the one-cent moves to which they are limited under current rules. The same proposed rule would change 100-year-old conventions for bundling stock trades in “round lots” of 100 shares. Another proposed rule will constrain the trading of company executives who use stock trading plans as a safe harbor to avoid insider trading liability. Research has shown that insiders can use nonpublic information under current plans. Whatever rules the SEC adopts will be put out for public comment.
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