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U.S. regulators are asking exchanges to reveal the pricing and access rules around co-location services, which allow traders to place their servers in the same building as the platform.

The practice helps reduce execution times, and the requests are a broader review of high-frequency trading.

The Securities and Exchange Commission and the Commodity Futures Trading Commission are also seeking information on the volume of trading from co-location, according to exchange officials.

Trading firms pay market operators to place electronic terminals in the same buildings that house exchanges' servers.

While not a new concept, co-location has caught Washington's eye as regulators and lawmakers assess the growing role that high-frequency traders play in U.S. markets.

High-frequency trading firms, mostly private enterprises that execute millions of trades a day in pursuit of oft-tiny spreads, are now estimated to account for two-thirds of all stock trades in the U.S. Their presence is increasingly felt in derivatives markets as well.

Among regulators' chief concerns are that co-location services don't put any one type of market participant at a disadvantage, creating a two-tiered market that advantages those who can pay up for the best access.

Executives at NYSE Euronext (NYX) and Nasdaq OMX Group Inc. (NDAQ) said that the SEC will soon require exchanges to publish their co-location pricing alongside other exchange fees, with regulators able to approve or disapprove co-location fee schedules.

"What the SEC is concerned with, and what we're concerned with, is that anybody who wants that kind of access to a marketplace can do so, and do so in a fair, transparent way," said Eric Noll, head of transaction services for Nasdaq OMX.

From the exchange perspective, offering co-location creates a level playing field - any trading firm that wants to take advantage of close proximity can pay a standard fee and get the same speed as any other firm co-locating their trading systems in the same place as the exchange's infrastructure.

"All the high-frequency traders want is to make sure they're not at a disadvantage to anyone else," said Lawrence Leibowitz, global technology chief for NYSE Euronext. "Our goal is to have everybody on the same level."

Most exchanges, like Nasdaq OMX, Direct Edge and BATS Exchange, maintain partnerships with data center operators like Verizon Communications Inc. (VZ) and Equinix Inc. (EQIX) to provide co-location for high-speed trading outfits.

NYSE Euronext is building its own 400,000 square foot data center in Mahwah, N.J.

To a certain extent, Leibowitz said, exchanges have to offer co-location - if they didn't, a third party could buy the building next to an exchange's data center and rent out rack space to the highest bidder, promising the lowest possible latency.

"It's like real estate," he said.

Nasdaq OMX's Noll noted that co-location is about more than speed of trading. Locating firms' trading systems within the same facility as exchange servers ensures better security and a sustained connection to the marketplace, he said.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com

(Sarah Lynch contributed to this article.)