According to the US Securities and Exchange Commission (SEC) by 2009 this practice had become controversial, with some market participants saying that high frequency traders could use flash orders to unfairly exploit others and that it is akin to front running.
Markets have evolved since the days of floor brokers’ dominance, with computer algorithms now buying and selling shares 1,000 times faster than the blink of an eye.
[10] In 2009 critics of the practice (notably high-frequency trading firm GETCO[11]) contended this creates a two-tiered market in which a certain class of traders can unfairly exploit others, akin to front running.
However, a December 2009 article in The Banker noted: in a bid to fuel the controversy and fill column space, however, several commentators and pundits have complained bitterly that flashes expose information that may allow traders to ‘front-run’ orders.
The widespread perception, meanwhile, that flash orders are the preserve of hyper-sophisticated high-frequency traders has further cemented the misguided notion that the lay retail investor is in turn being cheated.
Additionally, any subscriber of Direct Edge can be a recipient of flashed orders.The U.S. Securities and Exchange Commission in September 2009[13][14][15] proposed banning the practice as part of regulatory reforms in the wake of the Financial crisis of 2007–2010.
[18] In 2009 Sang Lee, managing partner at Aite Group, an independent research firm in Boston, saw the debate about flash orders as more philosophical than practical.