BATS Files for Client Suspension Rules to Tackle Manipulative Market Behaviors

The BATS Client Suspension rule has been filed with the Securities and Exchange Commission (SEC) which, if approved, would allow the exchange operator to take swifter action to clamp down on manipulative behavior, cutting the process down to "a matter of weeks."

The rule would specifically target spoofing and layering activities "often undertaken by small groups of day traders, often located in foreign jurisdictions, accessing the markets via US broker dealers," according to BATS executive vice president and general counsel Eric Swanson.

"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 behavior immediately," says Swanson.

Earlier this year BATS settled a case with the SEC for $14 million ─ the largest penalty issued by the market watchdog ─ relating to the way order types were described by Direct Edge on its exchanges.