New Rules For High Frequency Trading? (GS, JPM)

Banks like Goldman Sachs (NYSE: GS) and J.P. Morgan (NYSE: JPM) are down slightly this morning, on concerns the SEC is going to add new regulations on computerized trading, or high frequency trading (HFT),

The SEC is concerned that the spread of HFT has begun to affect the integrity of the stock market. As a result, they are stepping in with more stringent regulations about the ability of high-speed traders to unfairly manipulate prices of individual securities.

Last year, the New York Stock Exchange voluntarily implemented "breakers" for individual stocks, limiting the amount of by which an individual security could fluctuate in price within a certain amount of time. Although its 10% limit only applies to moves down in the stock price, the SEC is considering adding more stringent limits, as well as limits on how much a security could move up in a given amount of time.

Never before has there been a limit on how much a security could move up, so this would be an entirely new regulation on volatility for U.S. securities.

At last check, shares of Goldman were down 14 cents to $164.50, while shares of JP Morgan were off 50 cents to $44.96, a loss of 1.1%.