Fidelity Investments said on Thursday it is exploring the creation of a new trading venue with other asset managers, as regulators investigate the controversial practice of high-frequency trading.
Fidelity, the No. 2 mutual-fund company, and other so-called buy-side firms have been using alternative trading systems (ATS) to reduce predatory behavior that undermine getting the best price when trading stocks. In 2012, for example, Fidelity introduced an extension of its CrossStream ATS Â to execute block trades anonymously.
Fidelity on Thursday offered few details about what a new trading platform might provide. Company spokesman Steve Austin said Fidelity is looking at more ways to boost fund performance and to improve other areas such as transparency and liquidity.
The development comes as the fairness and efficiency of exchanges have come under scrutiny recently over concerns they may not offer equal terms to all investors.
Many banks and hedge funds use sophisticated computer programs to send large batches of orders into equity and futures markets in fractions of a second, a controversial practice known as high-frequency trading (HFT).
Defenders of HFT say the firms make it easier for other buyers and sellers to meet each other in the market, but critics argue it can cause sudden market crashes and easily mask market manipulation or other illegal activity.