Bats Granted SEC Approval to Combat Manipulative Market Behavior

The newly granted SEC ruling allows Bats to explicitly address disruptive quoting and trading practices across its exchanges.

Bats Global Markets (Bats) has just received formal approval from the US’ Securities and Exchange Commission (SEC) for the passage of the Bats Client Suspension Rule, which helps facilitate more steadfast action on behalf of the group against manipulative market behavior, according to a Bats statement.

Many exchanges have dealt with a litany of issues such as spoofing and layering, albeit to varying degrees, however Bats’ efforts have been rewarded by the SEC as it has taken more concerted steps to prohibit manipulative behavior on its exchanges. The rule itself, approved last week on February 18, 2016, is noteworthy as it explicitly addresses disruptive quoting and trading practices, in essence providing an expedited process for Bats. The regulatory filing by the SEC can be read by accessing the following link.

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Under the current disciplinary framework in American markets, a number of manipulative behaviors have the potential to drag on for months or in some extreme cases several years to reach an ultimate resolution. However, the newly approved Bats Client Suspension Rule effectively accelerates the overall process, granting regulators greater assistance from Bats Exchanges in curbing ongoing disruptive quoting and trading behavior.

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According to Bats Chief Regulatory Officer and Executive Vice President Tami Schademann, in a recent statement on the approval: “As we’ve noted previously, instances of spoofing and layering are limited in the U.S. markets, but we believe regulators should have the proper tools to stop such disruptive quoting and trading behavior as quickly as possible for the benefit of all investors.”

“The Client Suspension Rule, which is designed to preserve our clients’ due process rights through expedited notice and an opportunity to be heard by an impartial Hearing Officer, is our latest attempt to stand up for all of these investors and put a stop to disruptive quoting and trading practices, such as spoofing and layering,” she added.

Last week, Bats made headlines after its BATS Chi-X Europe unit changed its name, dropping the Chi-X component from its title. The group is now known as Bats Europe and henceforth has opted to utilize a new logo in tandem with its name change. The new change only affected Bats Europe, with its existing Bats BXE Order Book, the Bats CXE Order Book and BXTR maintaining their current names.

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