The SEC summoned a meeting of the Exchange CEOs to Washington. According to Bloomberg News, the CEO of the Exchanges met with SEC chairmen, Mary Schapiro, yesterday concerning a proposal to implement a short-term circuit breaker system in an effort to mitigate vast losses during investor panic situations. We know too well that during a volatile trading day as panic spreads the sell-off accelerates and the cycle of irrational trading begins. The Washington pow-wow resulted in an agreement to develope a framework for “strengthening circuit breakers" and the handling of erroneous trades. Accordingly, the Exchange CEOs are faced with determining the point when trading should be temporarily halted during periods of extreme swings in either direction; gains or declines.
Additionally, the Exchange officers were asked to examine steps for aligning the various trading rules to prevent the conflicting systems from aggravating market plunges. It's unfortunate, but crisis management seems to be the rage around the world. Nevertheless, at least from our standpoint, solutions are on the table for the future mitigation of panic driven plunges in the financial markets. It would appear that the SEC is on track for improving our system of trading. Who knows, if the law makers are serious about Wall Street reform and tightening regulations for Wall Street, we may actually enhance investor protections. This will ultimately impact us all.
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K. Reilly
Cohn-Reilly Report
