By Vicki Needham - 05/20/10 11:51 PM EDT
Possible explanations for the recent stock market plunge haven’t satisfied lawmakers, who pressed federal regulators for more answers during a hearing on Thursday.
“I’m concerned that you’re not quite sure what, exactly, happened,”
Sen. Jack Reed (D-R.I.), chairman of the Senate Banking Securities,
Insurance and Investment subcommittee, told exchange regulators.
Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro
told the panel that there is “an extraordinary amount of data” to sift
through. On May 6, the date of the crash, there were 66 million
different trades and 19 billion shares of stock traded that are now
being examined for anomalies, she said.
“At the end of the day we want the markets to operate fairly,
effectively and efficiently for all investors,” Schapiro told the panel.
Sen. Jim Bunning (R-Ky.) suggested that the SEC and CFTC consider
asking Congress for emergency powers to avoid future problems.
In the two weeks since the crash, the SEC and the CFTC created a
joint advisory panel of market experts to examine the possible reasons
behind the crash. One change the group will consider is the adoption of a
new circuit breaker to give the markets a “time out” in cases of
The circuit breaker would require a pause in the trading of
individual stocks in U.S. equity markets if the price changes 10 percent
or more in a five-minute period. The circuit breaker will be tested out
in a pilot program on the S&P 500 index.
The joint SEC-CFTC panel also will consider recalibrating the current
circuit breakers, which weren’t triggered May 6.
The panel will hold its first meeting on Monday.
The speed of the investigation is hindered by aging technology to
evaluate the amount of data coming in in different formats from the
various exchanges, which may prompt the regulators to hire a third party
to help crunch the data, Schapiro said.
“It’s an enormous challenge to regulate across all the markets,” she
told the panel.