Bats Global Markets Inc. is in negotiations with U.S. regulators to settle accusations that Direct Edge, the stock exchange operator it bought in January, gave unfair advantages to high-frequency traders, according to a person familiar with the matter.
The settlement talks follow a U.S. Securities and Exchange Commission inquiry begun more than two years ago into key facets of modern markets, including order types -- or instructions for handling transactions that traders can send to exchanges. Critics including Haim Bodek, a former Goldman Sachs Group Inc. trader, allege that the fastest traders use the dozens of order types available at exchanges to disadvantage other investors.
