THE INVISIBLE POWER OF MACHINES: REVISITING THE PROPOSED FLASH ORDER BAN IN THE WAKE OF THE FLASH CRASH
2011 Duke L. & Tech. Rev. 003
Technological innovation continues to make trading and markets more efficient, generally benefitting market participants and the investing public. But flash trading, a practice that evolved from high-frequency trading, benefits only a select few sophisticated traders and institutions with the resources necessary to view and respond to flashed orders. This practice undermines the basic principles of fairness and transparency in securities regulation, exacerbates information asymmetries and harms investor confidence. This iBrief revisits the Securities and Exchange Commission’s proposed ban on the controversial practice of “flash trading” and urges the Securities and Exchange Commission and the Commodity Futures Trading Commission to implement the ban across the securities and futures markets. Banning flash trading will not impact high-frequency trading or other advantageous innovative trading practices, and will benefit all market participants by making prices and liquidity more transparent. In the wake of the May 6, 2010 “flash crash” and the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, now is an opportune time for the Securities and Exchange Commission and Commodity Futures Trading Commission to implement the ban.
THE RISE OF COMPUTERIZED HIGH FREQUENCY TRADING: USE AND CONTROVERSY
2010 Duke L. & Tech. Rev. 016
Over the last decade, there has been a dramatic shift in how securities are traded in the capital markets. Utilizing supercomputers and complex algorithms that pick up on breaking news, company/stock/economic information and price and volume movements, many institutions now make trades in a matter of microseconds, through a practice known as high frequency trading. Today, high frequency traders have virtually phased out the “dinosaur” floor-traders and average investors of the past. With the recent attempted robbery of one of these high frequency trading platforms from Goldman Sachs this past summer, this “rise of the machines” has become front page news, generating vast controversy and discourse over this largely secretive and ultra-lucrative practice. Because of this phenomenon, those of us on Main Street are faced with a variety of questions: What exactly is high frequency trading? How does it work? How long has this been going on for? Should it be banned or curtailed? What is the end-game, and how will this shape the future of securities trading and its regulation? This iBrief explores the answers to these questions.
ONLINE FANTASY SPORTS LITIGATION AND THE NEED FOR A FEDERAL RIGHT OF PUBLICITY STATUTE
2010 Duke L. & Tech. Rev. 002
The right of publicity is currently a jumble of state common law and state statutes, but the online fantasy sports industry crosses state lines with ease. Having witnessed the great revenue potential of online fantasy sports, professional sports leagues are trying to strong-arm independent fantasy sports providers out of the business by using the right of publicity to assert property interests in the statistics generated by professional players, and used by fantasy sports providers to run their online games. The first such attempt–by Major League Baseball–failed. However, the state law nature of the right of publicity prevents any single court opinion from binding the industry or other jurisdictions. The National Football League is attempting to achieve a more favorable result in a different jurisdiction. If successful, other professional sports leagues will be encouraged to litigate the issue, and Major League Baseball might even attempt to re-litigate its position in other states. This free-for-all could result in different rules for different sports in different states, which would not only be untenable for the online fantasy sports providers, but a violation of the Constitution as well. A cohesive federal right of publicity statute would (1) bring uniformity to the doctrine, (2) give federal courts (where these actions are being brought) a federal law to apply instead of allowing them to continue muddying the application of state laws, (3) directly address First Amendment concerns, and (4) solve the dormant commerce clause violation alluded to above.