High-speed trading platforms would begin to look less like tangled webs of impenetrable computer fortresses and more like old-fashioned exchange floors under a plan put forth by an academic consortium.
The proposal, advanced by the Stevens Institute of Technology and released publicly Thursday, would assign a specific role to certain high-frequency trading firms: Sort of a cyber-market-maker who would sit in the middle of the trading operation directing traffic but unable to do any actual trading.
That would separate the dual role of market maker and broker that has allowed sophisticated firms to get access to price movements ahead of slower competitors, creating an advantage that has caused some observers to say the market is unfair, according to the plan.
Michael Lewis released a book earlier this year called "Flash Boys" about the industry, and alleged in promotional interviews that the stock market is "rigged" because of advantages that high-speed traders enjoy.
In the Stevens proposal, advanced by the institute's financial engineering division, the solution would in some ways resemble one put forth in the Lewis book. Lewis profiled a firm called IEX, which devised a system called "Thor" that allowed for offers on stocks to reach the multiple exchanges simultaneously, preventing the front running that some HFT firms try to execute.