Published: Tuesday, 4 Aug 2009 | 1:54 PM ET

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AP

The Securities and Exchange Commission is moving toward a ban on a trading practice that gives some brokerages a split-second advantage in buying or selling stocks.

SEC Chairwoman Mary Schapiro has said in a statement Tuesday that the agency is working to create a rule to ban the trades known as flash orders.

Flash orders give certain members of exchanges including Nasdaq, Direct Edge and BATS the ability to buy and sell order information for milliseconds before that information is made public. High-speed computer software can take advantage of that brief period to allow those members to get better prices and profits. (Click here to read more about the practice)

A proposal to eliminate the orders would still have to be approved by the entire commission and be open to public comment before being implemented.

Earlier on Tuesday, Senator Charles Schumer (D-NY) said that a SEC ban on flash trades was "imminent."

Schumer said SEC Chairman Mary Schapiro "personally assured him that the agency plans to ban the practice of so-called 'flash trading' that gives advance knowledge of stock orders to certain traders."

"We salute the SEC for moving forward with this ban that will restore integrity to the markets," Schumer said.

Nasdaq CEO Robert Greifeld sent a letter to the Securities and Exchange Commission late last month. Greifeld wrote to SEC Chairman Mary Schapiro that concerns are "justified" about flashes and any order that is even briefly shielded from the entire market.

• Video: In Defense of Flash Trading

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