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SEC proposes central database for all trading data

By Zachary A. Goldfarb
Washington Post Staff Writer
Wednesday, May 26, 2010; 5:07 PM

As financial markets have rapidly grown in size and complexity, regulators have faced an increasingly difficult task of investigating allegations of fraud and understanding the root causes of anomalous events such as the "flash crash" of May 6.

The Securities and Exchange Commission took a step Wednesday toward making that job a bit easier by proposing to unify the collection of trading data across all stock and options markets.

The many exchanges and self-regulatory organizations that Wall Street has set up to monitor financial activity have different standards for keeping track of trades, which occur at lightning speed on electronic hubs located around the world.

As a result, SEC Chairman Mary L. Schapiro said, "stock market regulators tracking suspicious activity or reconstructing an unusual event must obtain and merge an immense volume of disparate data from a number of different markets and market participants."

Under the agency's proposed rule, the SEC, exchanges and self-regulatory organizations would set up a central database for consolidating all trading activity.

"The information would capture each step in the life of the order, from receipt or origination, through the modification, cancellation, routing and execution of an order. Most of the information would be required to be reported in real time, as the event -- including, receipt, routing and execution -- is occurring," Schapiro said. "This information is designed to allow regulators to more easily and quickly identify potentially manipulative activity occurring across markets and through multiple accounts at multiple broker-dealers."

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