U.S. Securities and Exchange Commission Approves Required Routine Testing of Computer Trading Systems

by Colonel on March 9, 2013

“U.S. stock exchanges could be subject to tighter oversight of automated trading under a federal proposal that advanced Thursday.

The Securities and Exchange Commission voted 4-0 to seek comment on rules that would require routine testing of trading systems. The exchanges would also be required to notify the SEC about a problem, including a system compromised by hacking. …

The proposal follows several cases where technical glitches disrupted trading. Stock trading now relies heavily on computer systems that exploit split-penny price differences. Stocks can be traded in fractions of a second, often by automated programs.

The rules would replace a voluntary program that most U.S. exchanges participate in. The public has 60 days to comment on the rules, after which the SEC can adopt them.

So-called high-frequency trading is estimated to account for more than 50 percent of all U.S. stock trading.

” — Copyright 2013 The Associated Press

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