Markets must improve tech safeguards, says SEC

By Staff | September 13, 2013 | Last updated on September 13, 2013
1 min read

A software glitch that saw trading halted on the NASDAQ in late August has the SEC demanding better safeguards for critical market infrastructure.

Following the incident SEC chair Mary Jo White called a meeting with leaders of equities and options exchanges, FINRA, DTCC, and the Options Clearing Corporation.


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She “want[s] those at the meeting – with the input of other market participants – to identify a series of concrete measures designed to address specific areas where the robustness and resilience of market systems can be improved, including the systems that were at the core of last month’s trading interruption.”

An SEC press release identifies specific measures:

· Provide comprehensive action plans that address the standards necessary to establish highly resilient and robust systems for the securities information processors (SIPs), including testing standards and disclosure protocols.

· Identify and provide assessments of the robustness and resilience of other critical infrastructure systems.

· Provide SIP plan and/or rule amendments addressing the issuance, effectiveness, and communication of regulatory halts.

· Review their rules relating to the trade break process and procedures to reopen trading following a trading halt, and provide amendments to those rules as necessary.

· Provide rule amendments to implement “kill switches” that would allow exchanges to shut down trading in the event of technological failures, and review and consider other potential risk mitigationmechanisms.

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