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August 8, 2012

Live Trading News: SEC Hunts Automated Trading

” The US Securities and Exchange Commission Chairwoman Mary Schapiro Friday said her agency was reviewing what caused a software glitch at Knight Capital Group Inc., a brokerage firm, which threw the US stock market into chaos on Wednesday.

Calling the incident “unacceptable,” the SEC chief said in a statement posted at the agency’s website that technical problems like the one caused by Knight Capital showed how investor confidence can be shaken.

She said they would decide, based on the result of the reviewing effort, whether additional measures are needed to limit the impact of such trading disasters in the future.

Dennis Kelleher, president of Better Markets, a nonprofit that advocates for tougher Wall Street regulation, said high-speed computerized trading is one of the biggest problems facing financial markets and regulators aren’t equipped to monitor it.

“This is not a glitch or a bug, this was a massive, computer-driven, wealth-destruction event that reveals how fragile the capital market structure in the United States has become and why investors are fleeing the markets like never before,” Mr. Kelleher said. “

Read Paul Ebeling’s full story from Live Trading News here

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