Still, these high frequency trading practices have come under the scrutiny of both the U.S. Justice Department and officials in New York State. Attorney General Eric Holder confirmed an investigation is underway.
We at the Justice Department are investigating this practice to determine whether it violates insider trading laws. he said. The Department is committed to ensuring the integrity of our financial markets -- and we are determined to follow this investigation wherever the facts and law may lead.
For a fee, some of the exchanges and financial information services have supplied the high speed traders with extra bandwidth, special high speed switches and ultra-fast connection cables. With that arrangement, HFT companies can receive information faster and gain an advantage over others in the market.
A new and controversial book, Flash Boys, has whipped up a storm about such trading practices, and cites BATS Global as one company it says is rigging the markets. On a business network program on CNBC, BATS CEO William OBrien defended his companys activities.
BATS Direct Edge didnt exist 10 years ago, he said. And we became the biggest stock market on any given day in the United States by going to our customers, proving we had a value proposition and winning their business. We didnt do anything by trying to scare people. And, I dont think its true and I dont think its right.
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