BATS Global Markets (BATS) on Thursday filed with the Securities and Exchange Commission (SEC) the BATS Client Suspension Rule, which would allow the company to take swifter action to prohibit manipulative conduct, such as spoofing and layering, on the BATS Exchanges.
The company notes that the current disciplinary process requires a lot of time for stopping manipulative practices such as layering and spoofing. If SEC approves the proposal, the BATS Client Suspension Rule would enable BATS to halt ongoing manipulative conduct in a matter of weeks, instead of the lengthier regulatory process that can take several years to reach a final resolution.
The Rule distinguishes itself by specifically addressing the practices of layering and spoofing via an expedited process.
“While instances of spoofing and other similar activities are limited in the U.S. markets, we believe regulators should have the ability to eradicate such disruptive behavior immediately,” said BATS Executive Vice President and General Counsel Eric Swanson.
“Pending SEC approval, the BATS Client Suspension Rule will allow us to swiftly obtain an order suspending a customer’s access to the exchange to stop disruptive and manipulative layering and spoofing which we believe is often undertaken by small groups of day traders, often located in foreign jurisdictions, accessing the markets via U.S. broker dealers.”
“We are working with our regulatory peers to ensure that all markets have the means to expedite the regulatory process whenever clear evidence of layering and spoofing is identified,” he said.
To view BATS Client Suspension Rule Filing, click here.