Exchange CEOs clueless about what caused shock Wall Street sell-off; Congress announces probe

By Agence France-Presse
Monday, May 10, 2010 17:25 EDT
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WASHINGTON — A key US congressional committee looking into last week’s shock Wall Street sell-off announced Monday it would question US financial regulators and executives from major exchanges about the plunge.

US Securities and Exchange Commission (SEC) chair Mary Schapiro and top officials at NASDAQ and the New York Stock Exchange were to appear Tuesday before a House of Representatives Financial Services subcommittee to discuss the stunning dive.

The director of the SEC’s Division of Trading and Markets, Robert Cook, and US Commodity Futures Trading Commission chair Gary Gensler were also to appear before the panel.

NYSE Euronext chief operating officer Lawrence Leibowitz, NASDAQ Transaction Services executive vice president Eric Noll, and Terrence Duffy, executive chairman of the CME Group, were also due to testify.

A day after the brief sell-off Thursday, which sent a wave of panic across global stock markets, President Barack Obama vowed an investigation into the “unusual market activity” that sent the Dow down almost 1,000 points in minutes in intraday trade.

“The regulatory authorities are evaluating this closely with a concern for protecting investors and preventing this from happening again,” Obama said.

On Monday, Democratic Senator Chuck Schumer of New York wrote a letter to the top US equities, options and futures exchanges urging them to adopt uniform circuit-breakers to slow vast, speedy sell-offs like last week’s plunge.

“Coordination and consistent safeguards between trading venues — and across markets — is essential,” the lawmaker said.

Schumer’s letter went to the top executives of the New York Stock Exchange, NASDAQ, Direct Edge, BATS Exchange, International Securities Exchange, Chicago Mercantile Exchange and Chicago Board Options Exchange, as well as Schapiro and Gensler.

The senator also called for regulators to develop a new market-surveillance system to track volatile trading.

Bloomberg News reports,

Heads of the biggest U.S. trading venues meeting with the Securities and Exchange Commission today could provide no clear reason for last week’s stock-market selloff, two people familiar with the matter said.

The chief executive officers of NYSE Euronext, Nasdaq OMX Group Inc., Bats Global Markets Inc., Direct Edge Holdings LLC, International Securities Exchange Holdings Inc. and CBOE Holdings Inc. saw no evidence that a mistaken order caused the plunge, according to the people, who asked not to be named because the discussions were private.

Agence France-Presse
Agence France-Presse
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