Intermarket Sweep Orders: trading aggressiveness not so bad

Virgilio G.P.M. · Law and Financial Markets Review (2025) · DOI: 10.1080/17521440.2025.2526329

Resumen

Intermarket Sweep Orders (ISOs) have been considered among the causes of the Flash Crash (6 May 2010), when the US financial markets burnt 1 trillion dollars in a matter of minutes. Since then, the topic was investigated in depth and regulatory intervention called for. Several authors consider ISOs harmful to financial market stability in general and a lot of research supported such a position. The Security and Exchange Commission provided a famous example of ISOs in its explanation of the Regulation National Market System and some renowned authors made use of such an example to support their findings about potential market instability. Yet, the Security and Exchange Commission example should be viewed as rather neutral and, at least from that example, it cannot be inferred that the use of ISOs necessarily increases volatility, widens spreads, takes excessive liquidity or potentially destabilizes markets.

Instituciones: Universidad Católica Sedes Sapientiae