OpenTradeCloud: Regulating the Next Generation of the National Market System

Abstract:     
This is a summarized and abridged version of some of the arguments made in the report “OpenTradeCloud: Regulating the Next Generation of the National Market System” [Summary Report], that is part of my doctorate research at Columbia Law School. It is still very rough and preliminary, and it is only intended as a contribution to the debate about the structure of equity markets being promoted by the SEC.

Basically, it identifies some deficiencies of the current RegNMS market structure, proposing an alternative regulatory model that is called "OpenTradeCloud". The OpenTradeCloud tackles many of the current incentive problems by establishing interoperability requirements, minimal open standards, disclosure rules, technological neutrality obligations, and changing the current governance structure of the National Market System. It heavily relies on the adoption of cloud computing technologies. Conceptually, the OpenTradeCloud would be one large pool of easily usable and virtualized trading resources (software and hardware) such as storage capacity, memory, searching engines, matching engines, development platforms for search and execution algorithms, databases and other services.

Number of Pages in PDF File: 31

Keywords: Regulation NMS, Market Microstructure, SEC, Concept Release, Equities Markets

JEL Classification: D23, D43, G18, G28, G34, G38, K22, L13, L22, L33, L44, L86

working papers series