The New York Times reports that Chuck Schumer has persuaded the SEC to ban one of the most controversial practices associated with high frequency trading:
The S.E.C. chairwoman, Mary L. Schapiro, said on Tuesday that she would push to eliminate a controversial high-frequency trading technique known as “flash orders,” which allow traders to peek at other investors’ orders before they are sent to the wider marketplace.
....In a flash order transaction, buy or sell orders are shown to a collection of high-frequency traders for just 30 milliseconds before they are routed to everyone else. They are widely considered to give the few investors with access to the technology an unfair advantage, even by some of the marketplaces that offer the flash orders for a fee.
Flash trading in an era of supercomputers and 10 millisecond latency is an abusive practive that should be eliminated without question. The other aspects of high frequency trading are a little murkier: they clearly give an advantage to firms who have the money and connections to colocate massive server farms with the exchanges, but the question is whether these practices are unfair and potentially destabilizing, not whether they're flat-out corrupt. That deserves further investigation, but getting rid of flash trading is a good start.