NASDAQ VOLUNTARILY BANS CONTROVERSIAL FLASH ORDERS

Posted August 6, 2009

NEW YORK – The Nasdaq OMX Group Inc. (Nasdaq:NDAQ) announced that it will voluntarily cease offering flash order types, effective September 1.

Nasdaq’s decision comes as the US Securities and Exchange Commission reportedly is considering banning flash orders, a form of high-frequency electronic trading that allows some traders to get a “sneak peek” at market activity. In addition, Sen. Charles Schumer had written to the SEC, demanding a ban on flash orders. Flash order types are also offered under other unique names by various electronic trading venues.

In a statement, Nasdaq said, “We appreciate that [SEC] Chairman [Mary] Schapiro and the Commissioners will assume overall leadership for the industry to conduct a comprehensive review of all issues related to flash orders. We recognize the SEC’s rulemaking process will take time, yet as an exchange we have the ability to move on our own. We respectfully call on other markets offering similar functionality to make the same decision.”