The Nasdaq Stock Market and BATS Exchange said in separate statements on Thursday they will voluntarily stop offering so-called flash orders, a controversial service that gives certain firms an advance look at market-bound trading orders.

No. 2 U.S. exchange operator Nasdaq OMX Group Inc said in a statement it would stop flashing orders by September 1, noting the U.S. Securities and Exchange Commission is conducting an industry-wide review of the practice. Nasdaq's program is known as FLASH.

A spokesman for BATS, the third-biggest exchange, said about an hour later that it too would withdraw its flash program, called BOLT, by September 1.

Both exchanges began flashing orders June 3, closely mirroring a program called Enhanced Liquidity Provider, offered for three years by Direct Edge, a fast-growing alternative venue that earlier on Wednesday defended the program as one that lowers trading costs and adds liquidity.

In a statement on Thursday, Direct Edge said it would suspend its plan to offer its trading program called Flare, but would continue to offer ELP.

ELP is considered in the industry to be the original flash order program and has been criticized alongside FLASH and BOLT.

SEC Chairman Mary Schapiro said this week the agency was drawing up plans to eliminate flashes, which critics say cloud transparent prices and benefit those with advanced trading software.

We recognize the SEC's rulemaking process will take time, yet as an exchange we have the ability to move on our own, said Nasdaq, the second-biggest U.S. exchange operator.

In its statement, Nasdaq called on rival markets to make the same decision. BATS said in a July 7 newsletter it supported a review of flashes and last week said it would back an outright ban.

Flash orders last for a fraction of a second before the exchange or alternative venue routes them elsewhere to the best national bid or offer.

Nasdaq OMX shares were down 0.1 percent on Thursday. It reported a 31 percent quarterly profit drop earlier in the day.

(Reporting by Jonathan Spicer; Additional reporting by Phil Wahba; Editing by Richard Chang, Gerald E. McCormick, Gary Hill)

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