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.

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
266
266 rated 2
452
452 rated 3
702
702 rated 4
671
671 rated 5
604
604 rated 6
640
640 rated 7
495
495 rated 8
267
267 rated 9
158
158 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ABBVABBVIE Inc10
ATVIACTIVISION BLIZZARD Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
LUVSOUTHWEST AIRLINES CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.