It seems that the regulators always arrive AFTER a major regulator disaster.
Bloomberg reports that the SEC is busy writing new rules designed to manage automated trading systems.
It would be understandable if this was the first instance of an algorithmic system going haywire, however we have now experienced several “flash crashes”, “fat finger” errors and other silly-named excuses for trading related blow-ups.
The SEC and other regulators can write as many rules as they like. Unfortunately, the reality is that they, nor the industry itself, has a firm handle on the programs they created.
While Wall Street puts their faith in the rocket scientist PHDs from MIT designing algo systems, the codes and trading systems are just as fallible as an internet site going down or spreading a virus.
The difference, when trading systems develop a mind of their own millions of dollars are lost, the average investor looses confidence in the stock market, regulatory oversight, governmental protection and capitalism itself.