U.S. stock and option exchanges reached an agreement to enhance the securities market following the order of federal regulators who wanted the exchanges to form new rules after three hours trading halt occurred on NASDAQ in August, reports Reuters.
Exchanges were given a soft deadline
Major exchanges; New York Stock Exchange operator NYSE Euronext and Nasdaq OMX, came to a consensus on the timing and nature of regulatory proposals that are meant to safeguard the securities information processor (SIP) responsible for the August 22 trading halt.
After the meeting with Securities and Exchange Commission’s headquarters in Washington with SEC Chair Mary Jo White held on September 12th, all the exchanges were given the deadline of 60 days. All of them were asked to present the new ideas, in five areas, along with a kill switch to stop trading during any disturbance.
Details of the measures not revealed yet
Exchanges released their joint statement while SEC chairman White was addressing the annual meeting of the Securities Industry and Financial Markets Association in New York, which was attended by hundreds of brokerages, banks and asset managers.
“We have made very good progress,” she told the audience. “I am expecting today… some concrete steps to implement all of the five areas that we talked about.”
White turned down the question when asked to comment on the development, and said that she will have to review what the exchanges have submitted. Later, she said that the reports are very constructive, but still work is left to be done.
Exchanges, also, did not provide details regarding the proposals saying it will be submitted to SEC in the form of filings.
Software need to be right
Lev Lesokhin, an executive vice president at CAST, a French software analysis and measurement company said that exchanges have not responded impressively even after the trading halt was a severe one.
The executive added that the industry saves itself by saying that technology is not perfect, which is a type of propaganda blitz used by the exchange to save itself from the responsibility and action. He added that the bad software is the main reason for these technical glitches, and zero defects is achievable if the software is built right. “I don’t see them addressing that issue head on.”