Securities Law Commons^™

The Stock Exchange As Multi-Sided Platform And The Future Of The National Market System, Steven Mcnamara

BYU Law Review

Since Regulation National Market System (Regulation NMS) came into force a decade ago, computer technology has transformed the stock markets. While Regulation NMS benefited investors by lowering stated transaction costs, it also created today’s complex and fragmented trading system. An increasing amount of trading now occurs off-exchange in dark pools and other “non-lit” venues, and hidden costs proliferate. In addition to the profits taken by high-frequency traders, these include the defensive costs of the technological arms race, the possibility of another “Flash Crash,” public suspicions of “rigged” stock markets, reduced allocative efficiency, and rising proprietary data fees paid by stockbrokers …