August 19, 2014
SEC-2014-1291-0001
Release No. 34-72689; File No. SR-EDGA-2014-16)
July 28, 2014
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing of Proposed Rule
Change to Establish a New Market Data Product Called the BATS One Feed
dodd frank principles:
Markets should be transparent.
Regulation should be consistent, without gaps that can be exploited by those who wish to indulge in risky,
destabilizing or illegal behavior.
Market participants, not taxpayers, should bear the risks of their market activities.
And regulators should have the willingness and the tools they need to apply these principles to the day-to-
day workings of the financial markets.
The Dodd-Frank Act translated these principles into law that is the foundation for effective regulation.
http://blogs.law.harvard.edu/corpgov/2012/11/16/dodd-frank-principles-and-provisions/
such a service would create an illusion for the non-premium customer, displaying an order book that does not
exist. when you couple such a service with undisplayed and anonymous orders, you have a good story but not
the accurate story. information is an important factor in the stock market.
this shifts risk from the marketmakers and brokers to the retail/institutional investors. i am quite concerned that the data from the order flow going through the EDGA exchange is not transparent to
regulators.
order types are referenced by name but not described. the names are not very descriptive of the function.
this means the order types are not transparent to the public.
it is apparent to me that EDGA is classifying order types as instructions without describing any such
instructions that might be available. this is because the people who use these instructions are brokers and
marketmakers and the public order flow/institutional customers cannot use these instructions.
some of this rule concerns data feeds. there should be no premium datafeeds to certain customers because
this turns the exchange order book into an illusion.
it is an illusion that EDGA can detect non-compliance with regulation SHO because this would depend on
acccurate data. since brokers do not submit accurate shortselling data to the exchange nor to FINRA, the
exchange cannot use this data to "detect" non-compliant orders.