High-frequency trading will face high-profile scrutiny next week when exchanges, brokerages and institutional investors come before a Senate panel looking for evidence of conflicts of interest in U.S. stock markets.
The Permanent Subcommittee on Investigation, led by Senator Carl Levin, is holding a June 17 hearing to examine the impact of conflicts on consumer confidence, he said in a statement yesterday. The panel will focus on how brokers balance the obligation to give customers best execution against services they provide for other brokers and trading venues, according to the statement.
Lawmakers are increasing pressure on regulators and prosecutors to rein in computerized and algorithmic traders who account for about half of U.S. stock trades. Traders like those highlighted by Michael Lewis in his book “Flash Boys” have been linked by critics to a May 2010 stock-market disruption and volatility during the European debt crisis.
Levin, a Michigan Democrat, sent letters in April to the Securities and Exchange Commission and Commodity Futures Trading Commission asking 13 questions on the effects, trends, concerns and regulatory reaction related to high-frequency trading. A witness list for the hearing will be provided later, the committee said.