So what does the SEC's proposed a ban on flash orders really mean? 

Well, you could argue that the practical import of the move has already had its intended impact. BATS and Nasdaq OMX have announced they will stop offering such order types. DirectEdge, which had pioneered the practice, however, seems determined to stick with the practice in some form. No indication yet of how it will respond. 

Despite the headlines, flash orders are a small part of the market, notes Sang Lee, Aite Group Managing Partner, accounting for around 3 percent of daily volume. "The somewhat overblown controversy over flash orders certainly illustrates the potential rush to judgment when specific issues within the institutional trading environment becomes politicized." 

The degree to which an arcane trading issue exploded into front-page news was surprising indeed. The New York Times' article seems to have tapped into a populist issue perfect for our times. The whole debate has been framed as one of fairness. There had recently been some talk that the concept could somehow benefit all investors, not just the big institutions. Some suggest that orders could be flashed more broadly, to the entire market even. But that was always more of an options-market centric idea that never really ignited. 

The reality is that while flash orders are a small issue in terms of overall market volume, such orders are taking on a kind of symbolic importance. Anshuman Jaswal, a Celent analyst, says, "Any decision regarding flash orders will set an important precedent for other technology related debates in the capital markets." 

I couldn't agree more. The flash orders controversy certainly points to more important controversies on the horizon. The arguments, pro and con, are worth monitoring for this reason alone. One area that people are talking about is dark trading. It's all but guaranteed that we're going to see more regulatory scrutiny of a practice that accounts for more than 20 percent of all trading volume. Such a move cannot be ignored. - Jim