Securities and Exchange Commission (SEC) chair Mary Jo White wants to eradicate exchange errors to renew market confidence in the technology-dependent US securities markets.
Speaking at the Securities and Industry and Financial Markets Association annual meeting in New York on Tuesday, White said the industry and its regulators should aim for zero tolerance. Tuesday marked the deadline for feedback from exchanges summoned by the SEC in September after a Nasdaq glitch halted trading for three hours.
“Our objective has to be zero tolerance,” she said. “We all know technology is never going to be perfect so we also have to focus on what you do when you do have an incident.”
White said data was key to any regulatory decisions, noting that the tendency to blame market instability on technology-driven innovations such as high-frequency trading may not always be accurate.
“We’re keen to have our solutions very much data driven,” she said, adding that the SEC supported further developing kill switches for the equities and options markets and enhancing procedures in the event of a market error.
“We’re focused on making sure we have all the data and analytics that we need to decide what should be done if anything with regard to high-frequency trading,” she said.
White said the Commission would continue its holistic approach to market reform and oversight, looking at every issue relevant to market structure, including the role of self-regulatory organisations (SROs).
November 12 also marks the end of the SEC comment period for new alternative trading system (ATS) reporting requirements put forth by SRO body the Financial Industry Regulatory Authority.
In March, the SEC proposed a new regulatory framework, Regulation Systems Compliance and Integrity (Reg SCI) to bolster the robustness of the US securities market infrastructure, but feedback from market participants has suggested the regulator’s first draft will impose significant cost burdens and reduce innovation and competition.
An online poll conducted by theTRADEnews.com in September found that 44% of respondents believe market glitches are an inevitable part of the modern securities trading environment.