August 30, 2012

The U.S. Securities and Exchange Commission announced that its upcoming market technology roundtable next month will focus on figuring out best practices for managing crises in real-time, and on ways to prevent potentially market-dislocating trading errors from wreaking havoc on investors.

The roundtable, which is scheduled for Sept. 14, comes on the heels of several high-profile technological mishaps in the marketplace this year, including Knight Capital Group's rogue algorithm, Facebook's disastrous initial public offering, and problems surrounding the market debut of BATS Global Markets.

[Wall Street's 5 Biggest Technology Fails.]

The SEC said the roundtable will feature two panels, with the first being on how to prevent trading errors. The second will focus on how to respond to such errors and malfunctions in the markets, and how to manage crises in real-time.

Plans for the roundtable were announced following the errant trades which resulted in $440 million in losses for Knight, which nearly forced the broker and market maker out of business.

"Given the high speeds at which many market participants can generate and process orders and trades, errors in automated processes can rapidly compound," the SEC said in a statement. "Because other market participants react equally as fast to the activities of those market participants, errors generated by one system or firm can quickly propagate across the entire marketplace, resulting in a cascade of further error-related activities."

ABOUT THE AUTHOR
As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced ...