U.S. stock exchanges offer plans to prevent trading glitches

Tue Nov 12, 2013 7:21pm EST
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By Herbert Lash

NEW YORK (Reuters) - U.S. stock and option exchanges said on Tuesday they reached a general agreement on how to strengthen securities markets after federal regulators ordered them to come up with new rules in the wake of Nasdaq's three-hour trading halt in August.

Exchanges, including New York Stock Exchange operator NYSE Euronext and Nasdaq OMX, said they agreed on the timing and nature of certain regulatory proposals, including rules designed to protect the securities information processor (SIP) at the center of the August 22 trading halt.

The exchanges were given a soft deadline of 60 days after a September 12 meeting at the Securities and Exchange Commission's headquarters in Washington with SEC Chair Mary Jo White.

They were asked to come up with reforms in five areas, including a kill switch to halt trading during disruptions and new testing and disclosure protocols for the processors, which disseminate stock quotations and last sale prices to investors.

The exchanges' joint statement came as White spoke to the annual meeting of the Securities Industry and Financial Markets Association in New York, which represents 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 declined to comment on specifics, saying she had yet to see what the exchanges submitted. In a statement she later said "today's reports are very constructive, but work remains to be done."

Given the severity of the trading halt, the exchanges' response seems underwhelming, said Lev Lesokhin, an executive vice president at CAST, a French software analysis and measurement company.   Continued...

A trader works on the floor of the New York Stock Exchange, November 12, 2013. REUTERS/Brendan McDermid