SEC to clamp down on high frequency trades in bid to stabilise overall market

City A.M. Reporter
The US Securities and Exchange Commission (SEC) will take further steps to make markets more stable and trustworthy following the May “flash crash,” and is zeroing in on lightning fast computer trading codes that “go crazy,” the agency’s head said yesterday.

The SEC, the top US securities regulator, must address the use of algorithms, the computer codes that power high-frequency trading and disrupt the marketplace, SEC chairman Mary Schapiro told the Securities Industry and Financial Markets Association annual conference yesterday.

“We hope this will lead to a more stable marketplace,” she said.

The SEC has been under pressure to bolster the integrity of the markets after the 6 May “flash crash” caused stocks to plunge wildly, wiping out $1 trillion in market capital, and then recovered in mere minutes.

The SEC has already rolled out a programme aimed at protecting companies’ stocks if they are dropping uncontrollably.