NEW YORK, Aug. 3 (UPI) -- A former chairman of the U.S. Securities and Exchange Commission said the digital culture leaves the financial system vulnerable to a major glitch.
"The larger question is whether our markets are adequate to deal with the technology that is out there," said former Chairman Arthur Levitt Jr. in a discussion of Wednesday's computer glitch that cost trading firm Knight Capital $440 million in two days.
"I don't think they are."
Market analysts and others are saying Wednesday's event that created errant trades that choked up trading in New York was caused by a trading program Knight Capital had rushed into place, The New York Times reported.
Several major players in the financial world are now calling for stricter regulations on computerized trading, including vigorous tests for new programs.
The SEC said it was "considering what, if any, additional steps may be necessary," above and beyond its investigation into Wednesday's incident.
"What is starting to become clear is that the costs in terms of these random shocks to the system are occurring in ways that people never anticipated," said Henry Hu, a former SEC official, who is now a professor at the University of Texas in Austin.
Although some say the SEC is not doing enough in response to previous computer glitches that shocked the system, the commission is scheduled to install next year its own market override called "limit up, limit down."
It forces a stall in trading if a stock price behaves erratically. It is scheduled to go on line in February, the newspaper said.
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