Subpoenas Issued to High-Speed Trading Firms by NY Attorney General

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An official close to the investigation said, the New York Attorney General’s Office has issued subpoenas to six firms and sent a letter to another for details about split-second stock trading and any unfair advantages. According to The Associated Press the official told them that the subpoenas went last week to trading firms including Chicago-based Jump Trading LLC and Chopper Trading LLC and Tower Research Capital in New York. The Official asked to remain anonymous. Tower Research, Jump Trading and Chopper Trading have not commented.

Advantages in computer hardware and placement enable some traders to get millisecond timing advances to make “rapid and often risk-free trades before the rest of the market can catch up,” said Attorney General Eric Schneiderman. The Attorney General’s office has the right to investigate securities fraud under New York’s Martin Act, their looking for details about trading strategies and special arrangements with trading venues including exchanges and so-called “dark pool” for buying and selling securities. Last month, at a Law School symposium, Schneiderman spoke of some of the concerns. “Rather than curbing the worst threats posed by high-frequency traders, our markets are becoming too focused on catering to them, he said. 

  

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According to the Attorney General’s office, the advantages included extra computer network bandwidth, ultra-fast connection cables and special high-speed switches to computer servers. An agreement by the Attorney General was made last year, for Thomson Reuters to stop selling to high-frequency traders a two-second peek at some market-influencing consumer survey results, with agreements for several financial firms to stop cooperating with analyst that preferred exclusive clients.

Image Credit: nypost.com