SEC, Wall Street mull controls on high-speed trading

After a string of high-speed trading debacles, regulators and financial firms plan to bat around ideas to keep technology from running amok on Wall Street.

Executives from major exchanges and trading firms are set to take part in a daylong discussion Tuesday of Wall Street technology issues at the U.S. Securities and Exchange Commission in Washington.

High-profile glitches this year have roiled markets and challenged investor confidence in the stock market. Earlier this year, the BATS exchange had to cancel its own initial public offering. Then the Nasdaq market’s computer glitches marred Facebook’s IPO. More recently, a trading software malfunction lost $440 million at Knight Capital Group, nearly killing the major brokerage.

The SEC has yet to tighten regulations that may prevent further meltdowns, but some in the industry are already voicing support for new rules.

For example, Getco, a major brokerage that was among the firms that bailed out Knight, said it supports exchanges putting in place “kill switches” that could abort runaway trading programs before they cause too much damage, according to a letter the firm filed with the SEC on Monday.

Mary Schapiro, chairman of the SEC, told the Wall Street Journal that the industry seems more receptive to new regulations.

“It’s pretty clear to us that the Knight Capital episode really instilled some fear among financial-services firms,” Schapiro told the Journal. “Now we’re starting to see people in the industry more broadly talk about those same issues.”

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