US SEC: Protecting long-term investors a priority

WASHINGTON: The first responsibility of the US Securities and Exchange Commision is to protect long-term investors if their interests conflict

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with short-term traders, the head of the SEC said in a letter revealed on Monday.

"I firmly agree that the commission's focus must be on the protection of long-term investors," SEC Chairman Mary Schapiro said in a Sept 10 letter to Senator Ted Kaufman, Democrat of Delaware. Kaufman had asked the SEC to review what he called "questionable" developments in the structure of capital markets

such as so-called dark pools, flashes, and co-location.

Schapiro said that vigorous competition among short-term traders can lead to important benefits for long-term investors but that if their interests conflicted, the SEC had a "clear responsibility" to uphold the interests of long-term investors.

The SEC has been examining market structure issues and is probing aspects of trading and transparency at "dark pools," where large block trades are done away from central exchanges. It is also reviewing co-location, where firms rent space at exchanges like NYSE Euronextin an attempt to shave valuable microsecond from trading times.