The Securities and Exchange Commission voted unanimously to propose a rule amendment to officially ban flash orders.

According to the SEC's statement, investors who have access only to information displayed as public quotes could be harmed if other market participants can see the flash orders and avoid the need to make orders publicly available.

SEC Chairman Mary Schapiro said in the statement, "Flash orders may create a two-tiered market by allowing only selected participants to access information about the best available prices for listed securities."

She added, "These flash orders provide a momentary head-start in the trading arena that can produce inequities in the markets and create disincentives to display quotes."

Flash orders are permitted as an exception to Rule 602 of Reg NMS but the SEC now says it is "concerned that the Rule 602 exception may no longer be necessary or appropriate in today's highly automated trading environment."

The vote today proposes the elimination of the flash order exception from Rule 602 and if adopted would prohibit displaying marketable flash orders on all markets from equity and options exchanges to ATSs.

he SEC is seeking public comment data on issues relating to flash orders and also seeks comments on whether flash order use in the options markets should be evaluated differently than in equity markets.