SEC proposes ban on "naked access" trading arrangement

01/13/2010 | Wall Street Journal, The

Mary Schapiro, chairman of the Securities and Exchange Commission, said the agency is concerned that "naked access" could lead to destabilizing losses that would threaten the stability of the market. The SEC proposed prohibiting the trading arrangement, a step that could hinder the high-speed trading industry. The proposal would mean "that if a broker-dealer is going to loan his keys [to a naked-access trader], he not only must remain in the car, but he must also see to it that the person driving observes the rules before the car is ever put into drive," Schapiro said.

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