BATS Global Markets (BATS) has filed with the Securities and Exchange Commission the BATS Client Suspension Rule, which would enable the company to take swifter action to prohibit manipulative behaviour, such as spoofing and layering, on the BATS Exchanges.

Manipulative behaviour such as layering and spoofing, can take an unacceptable amount of time to stop under the current disciplinary process. Pending SEC approval, the BATS Client Suspension Rule would allow BATS to stop ongoing manipulative conduct in a matter of weeks, instead of the lengthier, longstanding regulatory process that can take several years to reach a final resolution. The Rule distinguishes itself by specifically addressing the practices of layering and spoofing via an expedited process.

“While instances of spoofing and other similar activities are limited in the US markets, we believe regulators should have the ability to eradicate such disruptive behaviour immediately,” says BATS Executive Vice President and General Counsel Eric Swanson (pictured). “Pending SEC approval, the BATS Client Suspension Rule will allow us to swiftly obtain an order suspending a customer’s access to the exchange to stop disruptive and manipulative layering and spoofing which we believe is often undertaken by small groups of day traders, often located in foreign jurisdictions, accessing the markets via US broker dealers.

“We are working with our regulatory peers to ensure that all markets have the means to expedite the regulatory process whenever clear evidence of layering and spoofing is identified,” he says.