Ruder Expects Tighter Rules

Securities and Exchange Commission Chairman David S. Ruder said Monday that he expects more regulation of financial markets to ensure that they can continue orderly operations in times of excessively high volume.

Although Ruder declined to offer specific regulatory proposals, he said his chief aim in dealing with the kind of market volatility that occurred in last month’s crash is to ensure that there is enough liquidity, or free-flowing money, available to keep the markets operating.

“My preliminary observations are that some additional regulations will be necessary,” he told reporters after a speech to the National Press Club.

“We need to find ways to ensure that the clearance and settlement procedures of the broker-dealers are adequate to meet high-volume days,” he said.

“We need to be concerned most importantly about the availability of broker capital,” he added.

Ruder, a former law professor who took the helm of the SEC last August only to face the most volatile market period in history, also said he was concerned about investor access to the markets and the ability of exchanges to carry out trades during the Oct. 19 “Black Monday.”

Ruder reiterated earlier statements that the SEC found no major Wall Street firm in financial trouble during the crisis.

The SEC is currently studying several issues surrounding the volatility, including the effect portfolio insurance and index arbitrage trading, commonly known as computer program trading, had on the slide.

The Commodity Futures Trading Commission, which regulates stock index and other futures trading, has found that program trading, which involves simultaneous trading in futures and stock, did not cause the record stock price decline.