The Securities and Exchange Commission is stepping up its efforts to shine light on the market’s more shadowy corners, examining flash quotes, high-frequency trades, and so-called “dark pools.” But the agency just doesn’t have the technology or trading know-how to keep up, experts tell the Wall Street Journal. “You need the quantitative, analytical capacity that the agency has never had,” said one former SEC secretary.
The problem is that the agency doesn’t go out of its way to collect or analyze data, one former chairman says. Its last attempt to set up a market surveillance system in 1980 drew howls of protest and was discontinued once the exchanges promised to regulate themselves. Now the agency says it’s stepping up its training and recruiting, and developing its own screening system. But critics doubt it’ll change the agency’s enforcement-first, analysis-later mentality.