Wall Street’s confidence in market structure is shaky, survey finds


Even Wall Street has doubts about how the stock market is structured, according to a recent financial industry survey.

The survey found that 26% of respondents from brokerages, hedge funds, vendors and other firms had “very weak” confidence in Wall Street’s market structure, up from 3% in 2010.

The survey -- by the TABB Group, a Wall Street research and consulting firm -- was conducted in early August following Knight Capital Group’s trading debacle, in which a software glitch sent a flood of errant trades into the stock market and saddled the brokerage with a nearly fatal $440-million loss.


Only 2% of the 260 respondents said they had “very high” confidence in the U.S. market structure, down from 12% in May 2010, when $1 trillion briefly vanished from the stock market in the so-called Flash Crash.

Knight’s trading problems, along with glitches during Facebook’s initial public offering in May, have renewed calls to more tightly control computerized trading on Wall Street and to reassess the stock market’s complexity. Regulatory changes in recent years have paved the way for new electronic exchanges and trading platforms.

“There’s concern that cracks in the system exposed during the 2010 Flash Crash and the recent rash of technology-specific issues are exposing the industry to unacceptable risks,” Adam Sussman, a TABB partner, said in a statement.


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