WASHINGTON (AP) - U.S. stock exchanges and markets must establish a uniform system for tracking all orders and trades under a rule approved Wednesday.
The Securities and Exchange Commission said the requirement is intended to make it easier for the government to investigate market disruptions, such as the "flash crash" two years ago that sent the Dow Jones industrial average plummeting nearly 600 points in five minutes.
The SEC voted 3-2 to require all U.S. exchanges and electronic trading platforms to keep the same form of audit trails covering orders from start to routing to execution. At the present time, audit trails vary among exchanges. Regulators say that has made it more difficult to get their hands on current order data.
Regulators say the change will make it easier to pinpoint the causes of disruptions.
Under the rule, the U.S. exchanges will have to jointly submit a proposed plan for creating an overall system to collect and identify every trading order from start to execution. The plan must be submitted to the SEC by April. If it is approved by the agency, the exchanges would have to start reporting information within a year.
The SEC was criticized after the May 6, 2010 flash crash, which hurt investor confidence and highlighted the agency's inability to keep pace with technological changes.
Traditional exchanges are now competing with electronic trading platforms. And high-frequency traders have computers that can place trades in fractions of a second, giving them an edge when buying or selling stocks.
The speed also can disrupt the system when there are errors. That's what happened during the flash crash.
SEC Chairman Mary Schapiro said the new system would allow regulators to get prompt access to most of the data and help them reconstruct what disrupted trading in days, rather than weeks. It will also make markets fairer and more efficient, she said.
Schapiro, a Democrat, was joined by the two Republican commissioners, Troy Paredes and Daniel Gallagher, in supporting the rule.
Democratic members Elisse Walter and Luis Aguilar voted against it. They expressed concern that the requirements for a new tracking system had been weakened from the SEC's original proposal made in late May 2010.
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<strong>10 Stocks to Buy, Hold and Prosper<br />
<br />
</strong>Betting on companies that are not only profitable but also have a long history of increasing their dividend payments to shareholders is as good a strategy as you'll find for increasing wealth without exposing yourself to outsize risk.<br />
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Each of these 10 businesses has been issuing ever-higher checks to their investors for at least half a century, according to the dividend-tracking site <a href="http://dynamicdividend.com/dividend-dynamos/">The Dynamic Dividend</a>.<br />
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<strong>1. Diebold </strong>(<a href="http://www.dailyfinance.com/quote/nyse/diebold-inc/dbd">DBD</a>). This maker of safes and other security equipment yields 3% and pays out 50% of its profits as dividends. Management has increased the average payout by 5.4% annually over the past five years.</p>
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<strong>2. American States Water </strong>(<a href="http://www.dailyfinance.com/quote/nyse/american-states-water-company/awr">AWR</a>). This company pays a 3.1% yield as of this writing, with 45% of profits committed to dividends. This California water utility was founded in 1929 and has increased its average payout by 3.9% annually over the past five years.</p>
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<strong>3. Dover </strong>(<a href="http://www.dailyfinance.com/quote/nyse/dover-corp/dov">DOV</a>). Shares of this industrial machinery supplier yield 2.1% as of this writing, paying out 26% of profits as dividends. Management has increased the average payment to shareholders by 11% annually over the past five years.</p>
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<strong>4. Northwest Natural Gas </strong>(<a href="http://www.dailyfinance.com/quote/nyse/northwest-natural-gas/nwn">NWN</a>). It pays a 3.9% yield as of this writing, with 73% of profits earmarked for dividends. This Pacific Northwest gas utility celebrated its centennial two years ago and has increased its average payout by 4.7% annually over the past five years.</p>
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<strong>5. Emerson Electric </strong>(<a href="http://www.dailyfinance.com/quote/nyse/emerson-electric-co/emr">EMR</a>). Another member of the 100-plus club, this supplier of industrial electronics yields 3.2% as of this writing. Roughly 46% of earnings are committed to dividends. Management has raised the payout 9.1% annually over the past five years.</p>
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<strong>6. Genuine Parts Company </strong>(<a href="http://www.dailyfinance.com/quote/nyse/genuine-parts-company/gpc">GPC</a>). Yielding 3.1% as of this writing, this auto parts wholesaler pays 50% of profits back to shareholders as dividends. Management has increased the payout by 6% annually over the past five years.</p>
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<strong>7. Procter & Gamble </strong>(<a href="http://www.dailyfinance.com/quote/nyse/the-procter-gamble-company/pg">PG</a>).You already know P&G -- it's one of the world's most popular consumer products companies, maker of such items as Tide detergent and Pampers diapers. What you might have missed is the company's 3.3% yield, paid from 60% of annual earnings. Management has increased its spending on dividends by 11.2% annually over the past five years.</p>
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<strong>8. 3M </strong>(<a href="http://www.dailyfinance.com/quote/nyse/3m-company/mmm">MMM</a>). Originally known as Minnesota Mining and Manufacturing when founded in 1902, 3M -- the creator of Post-It Notes -- yields 2.7% as of this writing. Management pays out 37% of profits as dividends, and 3M has increased the per-share cut by 3.6% annually over the past five years.</p>
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<strong>9. Vectren </strong>(<a href="http://www.dailyfinance.com/quote/nyse/vectren-corp/vvc">VVC</a>). Founded in 1912, this central U.S. utility funds a 4.9% yield by paying 80% of earnings back to shareholders as dividends. Management has increased the payout by 2.4% annually over the past five years.</p>
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<strong>10. Cincinnati Financial </strong>(<a href="http://www.dailyfinance.com/quote/nasdaq/cincinnati-financial-corp/cinf">CINF</a>). The riskiest bet in the lot, this property casualty insurer pays out more than 150% of its annual profits as dividends. So while the history and current yield -- 4.6% as of this writing -- are no doubt enticing, management may be forced to curtail payments to shareholders in the coming years.<br />
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Should you invest in any of these stocks? That depends on whether you have an interest in learning more about the underlying businesses. And again, don't invest with money you'll need in the next five years. Stocks are wonderful at creating long-term wealth, but they're as dangerous as dynamite over the short term.</p>
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<a href="http://www.dailyfinance.com/2012/03/13/greek-default-the-biggest-in-history-no-problem-bernanke-says/">Greek Default the Biggest in History? No Problem, Says Bernanke!</a></p>
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<a href="http://www.dailyfinance.com/2012/02/25/taxing-cinema-the-irs-goes-to-hollywood/">Taxing Cinema: The IRS Goes to Hollywood</a></p>
The proposed rule called for securities markets to report trading information to the central database in real time. In the final rule, they must submit the data by 8 a.m. Eastern the next trading day.
In a statement, Wall Street's biggest lobbying group, the Securities Industry and Financial Markets Association, called the new version "a more manageable and cost-effective approach."
Regulators eventually determined that the flash crash occurred when an investment and trading firm executed a computerized selling program in an already-stressed market. The firm's trade, worth $4.1 billion, touched off a chain of events that ended with investors swiftly pulling their money from the stock market.
SEC officials said the new system also would help track insider trading.
