The Consolidated Audit Trail: An Overreaction to the Danger of Flash Crashes from High Frequency Trading

Authors

Hayden C. Holliman

Abstract

This Note discusses High Frequency Trading ("HFT"), its potential dangers and effects, and the regulations attempting to control the dangers and effects. Additionally, the Note analyzes the Consolidated Audit Trail's ("CAT") goals, potential problems, and costs. Part II provides an overview of HFT, how it affects the market landscape, and its function and goals. Part III examines the causes and repercussions of the Flash Crash. Part IV analyzes SEC regulations concerning market control, how they function, why they are important to prevent extreme market volatility, and the effectiveness of each regulation. Part V examines the purpose and need for the NMS Plan, why the adopted iteration of the CAT is ineffective, and conflicts of interest arising from Rule 613. Part VI discusses the potential costs of the CAT, specifically the actual financial costs and potential privacy costs. Lastly, Part VII summarizes why the CAT is an overreaction to the dangers of flash crashes.

First Page

135

Recommended Citation

Hayden C. Holliman, The Consolidated Audit Trail: An Overreaction to the Danger of Flash Crashes from High Frequency Trading, 19 N.C. Banking Inst. 135 (2015).
Available at: https://scholarship.law.unc.edu/ncbi/vol19/iss1/10