It's no secret that high-frequency traders (high-frequency trading news) are in the regulatory cross-hairs these days. Fairly or not, they are seen as culprits in the May 6 Flash Crash, and some in Washington are inclined to take some action.

One congressman went on record with this: "What social utility is there in high-frequency trading? Is high-frequency trading a necessary part of allocating capital or is it a parasitic attachment in which some smart people with fast computers can take a little piece of the profit that each real investor should get?" But delivering policies that would somehow restrict high-frequency trading would be difficult.

Knowing that, Rep. Brad Sherman has proposed a transaction tax--an idea that in general garnered lots of attention not so long ago before petering out as serious idea. "I hope instead we will take a look at high-frequency trading and see whether it should be limited or subject to just a small tax to recognize there is a social cost to this activity," he said at a hearing last week.

I doubt we'll get much traction on this. But the mood in congress remains angry, so perhaps we should not rule out that it will be seriously debated.

For more:
- here's a Dow Jones article on Sherman

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