A spate of recent glitches in trading markets is putting pressure on federal regulators to step in, and on institutional money managers to pay more attention to market infrastructure.
After the latest incident Aug. 22, when Nasdaq suffered a three-hour trading halt, Securities and Exchange Commission Chairwoman Mary Jo White wasted no time in calling for a Sept. 12 meeting of exchange officials and major market participants such as self-regulatory organizations and alternate trading firms to consider next steps.
The Nasdaq incident, while resolved within the day, “should reinforce our collective commitment to addressing technology vulnerabilities of exchanges. The commission is determined to enhance the safeguards,” Ms. White said in an Aug. 22 statement. She also vowed to speed up proposed rules to address the markets' operational risks, including technological failures, natural disasters and cyberattacks.
The agency is also in the midst of a review to see if its rules have kept pace with trading technology and practices such as high-frequency trading and dark pools.
Some pension fund officials and their managers hope to be included in the overall review. “We feel that (the SEC) should include public and corporate pension funds in the discussion since they are the largest group of asset owners, and larger plans manage equities internally,” said Schorr Johnson, spokesman for the $80 billion North Carolina Retirement Systems, Raleigh.