Kaufman: more regulation needed for larger traders
Source: The Duke Chronicle
August 26, 2009
Sen. Ted KAUFMAN, D-Del., Engineering '60 and a senior lecturing fellow in the School of Law, is at the forefront of an effort to improve the nation's principal financial regulatory agency-the Securities and Exchange Commission.
The New York Times wrote on its DealBook blog that in a letter to SEC Chairwoman Mary Schapiro Monday, KAUFMAN called on the regulatory body to find new ways to quickly adapt to changes in the financial markets.
At the center of KAUFMAN's concern is his belief that current regulation favors larger traders-such as brokerage houses and investment banks-over smaller-volume traders by allowing many of the more complicated trading methods they use to go unregulated.
"Flash orders, high frequency trading, co-location of servers, direct market sponsored access, liquidity rebates, dark pools, retail order flow-all these things happened in the last few years when the people in charge of the SEC and the administration basically felt that we should have self-regulation," KAUFMAN said in an interview with DealBook.
KAUFMAN has earned a reputation as a champion for tighter financial regulation in his brief term in the Senate thus far, taking his seat in January to replace former Sen. Joe Biden. In March, KAUFMAN was a co-sponsor of a bill aimed at limiting investors' ability to bet against a stock as its price fell in order to make a profit.
"In short, the SEC and the public it serves needs to step back and gain a clearer picture of what has happened," KAUFMAN wrote in his letter. "We need a thorough review of market structure issues so that our laws and regulations can keep pace with market developments."
