The chairman of the SEC made some interesting comments regarding the sheer speed of the markets. The SEC (SEC news) needs "to explore whether bids and orders should be regulated on speed so there is less incentive to engage in this microsecond arms race that might undermine long-term investors and the market's capital-formation function," Mary Schapiro said yesterday at a conference in Montreal, as reported by Bloomberg. Now this may scare some people. But it is unclear exactly what she means.

One would have to wonder if the SEC could really set a standard that would effectively cap the speed at which market orders can be placed. If so, it would strike at the heart of the high-frequency (high-frequency trading news) and quantitative trading community, which has developed faster and faster mechanisms. To be sure, these innovations perhaps have reached the point of diminishing returns. Still, every millisecond translates into a better short at alpha for some traders.

There are many who might hail such an effort. There are quite a few who feel that the whole high-frequency movement has been deleterious to the markets and to the average investors, the protection of which is still the focus of the SEC. This is very interesting. More information would be welcome. 

For more:
- here's the Bloomberg article

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