By Cydney Posner

Following are links to SEC press releases related to actions taken at today's open meeting. The first release relates to rulemaking actions designed to bolster oversight of credit ratings agencies by enhancing disclosure and improving the quality of credit ratings. Among the proposed new rules is one that would require disclosure of information about what a credit rating covers and any material limitations on the scope of the rating, as well as whether any "preliminary ratings" were obtained from other rating agencies (i.e., to deter "ratings shopping"). The SEC also adopted amendments to rules and forms to remove certain references to credit ratings by nationally recognized statistical rating organizations (presumably to reduce investor reliance). The SEC also voted to seek public comment on whether to amend SEC rules to subject NRSROs to liability when a rating is used in connection with a registered offering by eliminating a current provision that exempts NRSROs from being treated as experts when their ratings are used that way.

The SEC also unanimously proposed a rule amendment that would prohibit the practice of flashing marketable orders. Flash trading is a practice that gives traders involved a momentary advantage in buying or selling stocks, but has become a hot-button issue in recent weeks as some (such as Sen. Schumer) have warned of its adverse impact upon transparency and fairness on Wall Street. The WSJ describes it as a way to "allow some traders to get a sneak peak at market activity…. In a flash order, "a firm wishing to buy or sell stock can elect to freeze the order on an exchange for as long as half a second. Critics say this gives a select group of high-speed traders a window into the direction of the market and lets them make lightning-quick trades to profit." The WSJ also reports that, as part of the SEC's broader look into market structure issues, it is also exploring "possible regulations for high-frequency trading, which involves lightning-fast electronic trades, and dark pools, or private venues where large blocks of securities are traded anonymously." High-frequency trading reportedly now accounts for nearly two-thirds of stock market volume.

This content is provided for general informational purposes only, and your access or use of the content does not create an attorney-client relationship between you or your organization and Cooley LLP, Cooley (UK) LLP, or any other affiliated practice or entity (collectively referred to as "Cooley"). By accessing this content, you agree that the information provided does not constitute legal or other professional advice. This content is not a substitute for obtaining legal advice from a qualified attorney licensed in your jurisdiction, and you should not act or refrain from acting based on this content. This content may be changed without notice. It is not guaranteed to be complete, correct or up to date, and it may not reflect the most current legal developments. Prior results do not guarantee a similar outcome. Do not send any confidential information to Cooley, as we do not have any duty to keep any information you provide to us confidential. When advising companies, our attorney-client relationship is with the company, not with any individual. This content may have been generated with the assistance of artificial intelligence (Al) in accordance with our Al Principles, may be considered Attorney Advertising and is subject to our legal notices.