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Tim Quast
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We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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June 30, 1998

Draft Text of Proposed Rule Change

By Jeffrey L. Winograd

The following is a draft of the proposed changes in National Association of Securities Dealers trade-reporting rules for over-the-counter stocks, including stocks traded on Nasdaq, the OTC Bulletin Board and the pink sheets, as amended by the NASD. The changes would reduce 31(a) transaction fees on riskless principal trades, pending Securities and Exchange Commission approval. Deletions are in brackets, and new language is underlined.

A "riskless principal transaction" in which a member [that is, not a market maker in the security], after having received from a member or customer an order to buy a security, purchases the security as principal from another member or customer to satisfy the order to buy, or, after having received from a member or customer an order to sell, sells the security as principal to another member or customer to satisfy the order to sell, shall be reported as one transaction in the same manner as an agency transaction, excluding the mark-up or mark-down, commission-equivalent or other fee.

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