SEC Probing Possible Stock Chaos Shenanigans

Time to crack down on algorithm trading, lawmakers say

By Rob Quinn,  Newser Staff

Posted May 7, 2010 3:40 AM CDT

(Newser) – The SEC is on the trail of securities traders who might have "accidentally or maliciously" triggered yesterday's stock market see-sawing, insiders tell Bloomberg, or exploited it to profit illegally. The SEC and the Commodities Futures Trading Commission said after markets closed yesterday that they plan a joint probe into "unusual trading."

Whatever the cause of the Dow Jones' dizzying plunge, the panic has caused renewed calls for the SEC to crack down on high-speed trading using computer algorithms, Reuters reports. "The battle of the algorithms—not understood by nor even remotely transparent to the Securities and Exchange Commission—simply must be carefully reviewed and placed within a meaningful regulatory framework soon," urged Democratic Sen. Edward Kaufman.

A floor trader checks on the stock price at the Hong Kong Stock Exchange.
A floor trader checks on the stock price at the Hong Kong Stock Exchange.   (AP Photo/Kin Cheung)
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The potential for giant high-speed computers to generate false trades and create market chaos reared its head again today, - Sen. Edward Kaufman (D-Del.)

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