An unidentified source has disclosed to Bloomberg the subpoenas planned to be sent by New York Attorney General Eric Schneiderman to trading exchanges. The source, who is familiar with the matter, said Schneiderman has already requested information about high-frequency trading from alternative trading platforms, or commonly known as dark pools. The source added that the subpoenas to exchanges will be sent within days.
The subpoenas are part of an investigation Schneiderman has conducted over the fairness in the markets and the advantages that high-speed trading firms purportedly secure by having special access to information. In March, the NY Attorney General had announced that he is going to review the sale of products and services that provide faster data access and richer information on trades. Bloomberg said Wall Street banks and high-frequency trading firms pay thousands of dollars monthly to obtain these kinds of products and services from exchange firms.
This week, it has been reported that Schneiderman's office had reached an agreement with news distribution service PR Newswire for the latter to implement practices tha prevent its information feed from being unfairly used by high-frequency trading firms. Aside from the agreement, Schneiderman's office has also reached deals with other news wire service companies like Berkshire Hathaway Inc.'s Business Wire and Toronto-based Marketwired wherein the two has agreed to stop offering direct access to their services to high-speed traders, Bloomberg said.
High-speed trading, which is conducted in fractions of a second, has gained notoriety thanks to author Michael Lewis' new book "Flash Boys." The federal government has also took notice on the activity, with the Justice Department officials and the Federal Bureau of Investigation declaring that they are currently investigating whether the activity violates insider trading laws.
Bloomberg was unable to obtain an immediate response from Schneiderman's spokesman Damien LaVera about the subpoenas. The news agency said the subpoenas were earlier reported by Reuters.
