Regulators have devised a plan to address the Knight Capital fiasco: host a meeting of experts. The SEC announced yesterday that it will hold a roundtable discussion on improving the stability of high-tech trading next month.

The discussion is scheduled for Sept. 14, and it will bring together experts on designing and controlling the sort of high-tech trading systems whose failure cost Knight $440 million.

In the release, SEC chairman Mary Schapiro calls the roundtable an attempt to "keep pace with the rapid changes in market structure and technology over the last several years," adding that she looks forward to hearing a range of views on strengthening the system.

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Company Press Release

SEC to Host Market Technology Roundtable

Washington, D.C., Aug. 8, 2012 — The Securities and Exchange Commission today announced that it will host a technology roundtable next month to discuss ways to promote stability in markets that rely on highly automated systems.

The roundtable entitled “Technology and Trading: Promoting Stability in Today’s Markets” will take place on September 14 and convene experts on designing, operating, and controlling the systems that form the core of our market’s infrastructure.

Nearly all trading in the equity and options markets depends on the reliable performance of highly automated systems used by investors, broker-dealers, and exchanges and other trading systems.

“Reliance on technology has enabled the markets to achieve extraordinary levels of speed and efficiency,” said SEC Chairman Mary L. Schapiro. “But with technology comes a responsibility for getting it right, minimizing errors and protecting the interests of investors.”

Recent events have highlighted some of the risks of increasingly complex and interconnected trading systems, setting aside the larger public debate regarding high frequency trading. The roundtable discussions will be focused on the design and control of all types of automated market systems. When these systems do not work as intended, the failures can directly harm not only the operator of the system but in some cases a range of other innocent parties.

“The roundtable is part of the Commission’s ongoing effort to keep pace with the rapid changes in market structure and technology over the last several years,” said Chairman Schapiro. “I look forward to hearing the views of experienced technologists on how we can strengthen the stability of our market structure while still preserving the many benefits of electronic trading.”

 

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