HFT "Flash" Orders: Nasdaq Admission?

[girl gone mad]

HFT "Flash" Orders: Nasdaq Admission?
By Karl Deninger, http://market-ticker.denninger.net/archives/1266-HFT-Flash-Orders-Nasdaq-Admission.html">The Market Ticker

http://www.reuters.com/article/businessNews/idUSTRE56R5OA20090728?feedType=RSS&feedName=businessNews&rpc=23&sp=true">Oh my, now the game is afoot!

A Nasdaq spokeswoman said the exchange had no comment beyond a letter Greifeld sent to the SEC on Monday, in which he called for the elimination of "any order types or market structure policies that do not contribute to public price formation and market transparency."

Greifeld's letter listed "flash orders, internalized orders, enhanced liquidity providers, Block Talk orders, and dark pools," as order types that do not support price formation.

But wait....

The New York Democrat, who has urged the U.S. Securities and Exchange Commission to clamp down on the practice, said parent company Nasdaq OMX is willing to submit to a potential ban by the agency after it "reluctantly" started offering flashes early last month.

Did I just read that correctly? Did Nasdaq OMX tell Chuck Schumer that it intentionally (even if reluctantly) began offering order types that do not contribute to public price formation and market transparency?

That is, did they (perhaps unwittingly) just admit to the true purpose of these order types and their willing participation in same rather than doing what any good steward of a public trust should have done - that is, standing up immediately as soon as this chicanery began and raising hell?

Oh wait - maybe they did:

Nasdaq and rival BATS Exchange started on June 3 "flashing" buy and sell orders to exchange members, including big banks and hedge funds -- closely mirroring a service offered by alternative venue Direct Edge, which long offered the service to a smaller group of market participants, and was growing its market share at the exchanges' expense.

Ah.

So now we're getting to the bottom of this, aren't we?

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