The Securities and Exchange Commission is looking into certain types of stock trade orders that could be distorting share prices and trading volume, according to The Wall Street Journal. The SEC is investigating the practice called "quote stuffing" where exceptionally large numbers of orders to buy or sell stocks are placed and cancelled almost immediately, the Journal said citing anonymous sources.
It is also reviewing another practice known as "sub-penny pricing," where orders are priced in increments smaller than a penny, but are far from the price at which the stock is trading. Quote stuffing and sub-penny pricing have become more prevalent as high-frequency computer trading has become the dominant part of the stock market in recent years, the Journal said. The SEC could also be trying to determine if the pair of practices played a role in the May 6 "flash crash," a panicked disruption in trading that saw the Dow Jones industrials drop hundreds of points in minutes.
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