House panel to hold stock market inquiry
SEC investigation also looking into huge Dow plunge, possible role of high-speed computers
Computerworld - The House Financial Services Committee today said its securities subcommittee plans to hold a hearing next week to examine the operational issues surrounding the U.S. stock market plunge Thursday.
The Dow Jones Industrial Average dropped nearly 1,000 points in a half hour Thursday before bouncing back to within 348 points of the day's opening. Industry sources said the precipitous drop was likely due to both human error that was exacerbated by high-speed trading platforms rolled out over the past decade.
The Dow fell to 9,867 points from its previous day's close of 10,868 before rebounding to 10,464 points by the close of the market Thursday. Industry experts said it was obvious that there was some sort of "algorithmic error" in the computerized trading systems that caused the pricing in the markets to collapse.
For example, TD Ameritrade said one of its client's stock price orders started at $60 and dropped to 11 cents before rebounding. In another example, The Wall Street Journal's MarketBeat blog reported Accenture's stock price plummeted from more than $40 at 2:47 p.m. to a penny at 2:48 p.m.
The House Financial Services' securities subcommittee plans to hold a hearing at 3 p.m. Tuesday to address the causes of the dramatic drop in the Dow before it recovered.
House subcommittee Chairman Paul Kanjorski, (D-Penn.), said in a statement that Thursday's stock market seemed "just as volatile as it did in the fall of 2008."
"Reports have surfaced that much of this movement was potentially as a result of a computer glitch," Kanjorski said. "We cannot allow a technological error to spook the markets and cause panic. This is unacceptable. In this day and age and with the use of such complex technology, we should be able to make sure that our financial markets are effectively monitored and investors are protected."
Kanjorski also called on the U.S. Securities and Exchange Commission to investigate the problem.
Earlier this year, the SEC sent a letter to brokerage houses saying it was conducting a "broad review" of the equity market structure and asking them for comments. The review would include an evaluation of equity market structure performance in recent years and an assessment of whether market structure rules have kept pace with, among other things, trading technology.
The SEC asked for comment on a wide range of market structure issues, including high frequency trading, order routing, market data linkages, and undisplayed, or "dark," liquidity.
"The Commission intends to use the public's comments to help determine whether regulatory initiatives to improve the current equity market structure are needed and, if so, the specific nature of such initiatives," the letter stated.
As TurboTax deals with the last minute crush of filers, vice president Bob Meighan shares the four most commonly asked questions customers are asking this year.
- IT Certification Study Tips
- Register for this Computerworld Insider Study Tip guide and gain access to hundreds of premium content articles, cheat sheets, product reviews and more.
- The Big Data Opportunity for HR and Finance
- If CEOs, CFOs, CIOs, and CHROs want to drive their businesses forward, they will need to quickly recognize the enormous value of big...
- Manufacturing Outlook: Improving time to market, operational effectiveness and innovation in a highly competitive environment
- An enterprise project portfolio management solution can help manufacturers position themselves in the new competitive landscape.
- Time-to-Market: The Need for Speed in the Automotive Industry
- Bringing new vehicles to market quickly has never been more challenging. To bring new models to market on-time and on budget, automakers need...
- Application Rationalization Scorecard: Analysis to Action
- This paper details a proven method, used most recently to evaluate a financial services application portfolio. At the method's core is the scorecard....
- Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
- This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
All Financial IT White Papers
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- On-demand webinar: "Mobility Mayhem: Balancing BYOD with Enterprise Security" Check out this on-demand webinar to hear Sophos senior security expert John Shier deep dive into how BYOD impacts your enterprise security strategy...
- Mobile Security: Containerizing Enterprise Data In this on-demand webinar, Fixmo's Lee Cocking, VP of corporate strategy, explains why Apple-ization trends like mobility and "bring-your-own-device" (BYOD) are driving the...
- Endpoint Data Management: Protecting the Perimeter of the Internet of Things Not surprisingly, "Internet of Things" (IoT) and Big Data present new challenges AND opportunities for enterprise IT. Teams need to harness, secure and...
- How to Protect Enterprise Data Yet Enable Secure Access for End Users Learn how BYOD, Big Data and the use of rogue applications and devices is putting corporate data at risk, best practices from IT...
- All Financial IT Webcasts