The ban on "naked" sponsored access was expected and generally applauded as a way to make sure trading firms, especially high-frequency traders, are subject to risk controls as they launch their blizzards of orders. It makes perfect sense. But Matt Samelson, principal and equity market analyst at Woodbine Associates, tells Advanced Trader that there's a big flaw in the rule.

Samelson says the rules appears to allow broker-dealers that sponsor the buy-side firms to autonomously determine what adequate risk management controls there should require. "You end up having 'lack of risk management arbitrage,' meaning the firm with the lowest risk management wins the business. And it kind of dilutes the meaning of the rule," he said.

The SEC uses the term "reasonably designed" when speaking of these controls. But the question is: Who determines if the design is reasonable?

Buy-side firms will shop around and they just might go for the broker-dealer with the fastest through-put, so to speak. It'll be a sure sign of market arbitrage when broker-dealers make speed and latency a marketing issue. It may be that those with the fastest trades have the weakest controls.

It'll be interesting to see how this plays out. As of now, there is reason to worry that the ban's effectiveness may be seriously reduced.

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