WASHINGTON -- Sen. Mark Warner on Friday called on the Securities and Exchange Commission to conduct a "thorough investigation" of the Nasdaq Stock Market's three-hour trading outage.
Warner (D-Va.), a member of the Senate Banking Committee, said Thursday's technological problem was "troubling." In a letter to SEC Chairwoman Mary Jo White, he asked her to investigate and report back to Congress about how to avoid future problems.
"Securities markets need prudent regulation to ensure their integrity," wrote Warner, a former venture capitalist.
"A timely report on this market malfunction, proposals on how such disruptions can be avoided in the future, and strong remedial measures as appropriate will go a long way to restore confidence to the marketplace," he said.
Nasdaq said the outage, from 9:14 a.m. to 12:25 p.m. Pacific time, was caused by a faulty data link that disseminates stock quotes among exchanges.
Warner said the problem was "the second major disruption to markets caused by a glitch at the Nasdaq." The first was the exchange's problems with Facebook's initial public offering last year.
"Such glitches have serious consequences," Warner wrote to White.
"When an exchange fails to function properly, as was apparent on August 22, this type of event impedes our economy by eroding consumer confidence," he said. "In turn, retail investors are discouraged from participating in capital markets, thereby worsening liquidity and depriving entrepreneurs of capital needed to innovate and grow fledgling companies."
White said Thursday that the Nasdaq trading outage was serious and highlighted the "technological vulnerabilities of exchanges and other market participants." The SEC would push to enact rules, proposed this year, establishing new standards for trading systems, she said.
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