Nasdaq OMX Group Inc's proposal to offer algorithmic trading services that would compete against similar services offered by broker-dealers has been denied by a U.S. regulator. The exchange operator did not prove it would not have a competitive advantage over broker-dealers offering similar products if its proposal was granted, the U.S. Securities and Exchange Commission said in a filing dated Jan. 11. The SEC also highlighted other concerns, including the need for appropriate risk controls for the algorithmic orders, which electronically execute large stock orders over a specific time for specific securities and are generally aimed at institutional investors. A spokesman for Nasdaq declined to comment on the matter. On May 1, Nasdaq proposed a rule change to the SEC that would allow the exchange to offer three algorithmic order types, aimed at achieving the performance of specific benchmarks: volume weighed average price, time weighted average price and percent
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