Is NASDAQ thinking about reinstating FLASH orders?
We found a very interesting footnote in the just released NASDAQ comment letter to the SEC’s Concept release (http://sec.gov/comments/s7-02-10/s70210-168.pdf):
from page 11:
“20 The Commission determined preliminarily in the Fall of 2009 that investors did not have equal access to “flash” orders and it proposed to ban them. See Elimination of Flash Order Exception from Rule 602 of Regulation NMS, Exchange Act Release No. 60684 (Sept. 18, 2009). NASDAQ voluntarily withdrew its Flash functionality rather than create even the appearance of unfairness in its market. The Commission has not acted on that proposal and, in fact, it recently approved the registration of a new exchange despite its continued practice of flashing orders, indicating that flashing orders may be consistent with the statute and, thus, available for use by other markets.”
Is NASDAQ saying that since DirectEdge just got approved to be an exchange and since they still operate a pre-routed order strategy, then maybe all exchanges should go back to FLASH style orders? Or, are they just trying to put pressure on the SEC to finally ban these order types? We sincerely hope its the latter.