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SEC aims to track all securities trades

Associated Press / May 27, 2010

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WASHINGTON — Regulators moved yesterday toward requiring a uniform system for tracking all securities orders on US exchanges, in hopes of making it easier to investigate market disruptions like the May 6 plunge.

The Securities and Exchange Commission proposed, on a 5-to-0 vote, requiring exchanges to maintain an “audit trail’’ covering trading orders from start to routing to execution.

That, they said, would make it easier to investigate disruptions like the “flash crash’’ that sent the Dow Jones industrials down nearly 1,000 points in less than 30 minutes.

The system would be phased in under the SEC’s proposal and would not be fully operational until about three years from now. It would cost market players, including exchange monitoring bodies and brokerage firms, about $4 billion to put into place and $2 billion a year to operate, according to SEC estimates.

The proposed rule could be formally adopted after a 60-day public comment period, possibly with changes.

A new system would allow regulators to get access in real time to most of the data needed to reconstruct the type of market disruption that occurred on May 6, with the remaining data available in days rather than weeks, SEC chairman Mary Schapiro said.