Is quote stuffing legal?

High-speed computers have been buying and selling stocks and then immediately canceling the orders.

By Kim Peterson Sep 16, 2010 4:05PM
The Securities and Exchange Commission is investigating whether quote stuffing is legal, The Wall Street Journal reported.

This happens when someone places huge orders to buy and sell stocks and then cancels the orders immediately. Believe it or not, that split-second trade could cause stock prices to swing.

Quote stuffing is the latest round of funny business that can happen as high-speed trading takes in the stock market. This ultra-fast trading now accounts for two-thirds of market volume, the Journal reports.

The SEC is looking into how high-speed trading was involved in the May 6 "flash crash," and is expected to have a report out this month, the Journal reports.
One possible solution to quote stuffing is to require traders to hold orders open for a minimum length of time, said Mary Schapiro, the chairman of the SEC.

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