Flash trading makes up a small percentage of trades though it hardly sounds fair. As an outsider it sounds like gaming the system with whoever has the fastest computer. Cracking down on the ratings agencies has to be stepped up. The ratings agencies are now being sued by California and others due to their questionable ties to the businesses that they rate highly. Wall Street is not the only industry with such incestuous business relationships but when so much money was invested and then lost based on ratings, it's an easy target. NY Times:
The S.E.C. on Thursday proposed banning what are known as flash orders, which use powerful computers to glimpse at investors’ orders. The practice is often associated with a controversial corner of finance called high-frequency trading, which has grown, largely hidden from view, into a potent force in the markets.
The proposed ban was announced on the same day that the S.E.C. put forward new rules for credit ratings agencies, which were widely criticized for their role in the financial crisis. Together, the moves telegraphed a tougher line from the commission after a series of prominent missteps, including its failure to spot the Ponzi scheme orchestrated by Bernard L. Madoff.
