Introduction

The Flash Crash of May 2010, the software bug of Knight Capital, NASDAQ’s glitch on the first day of trading of Facebook and the publication of Flash Boys all motivate the calls to improve regulation. Both the SEC and FINRA are examining ways to improve market structure and regulations to prevent any players from having an unfair advantage. Many of the proposed improvements involve reducing the number of trading venues and regulating how an order must be routed. There are additional calls for creating more comprehensive data gathering and identification of orders and executions across all trading venues. These changes would create an additional burden on brokers and traders who are already suffering from vastly increased compliance and data gathering costs due to the regulations created by Dodd-Frank.

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