SEC Chairman Mary Schapiro let it be known Friday that the market regulator has taken up the gauntlet thrown down by Knight Capital's act of errantry.
The Securities and Exchange Commission will convene a "roundtable" in the coming weeks to address the "critical issues" raised by Wednesday's high-frequency foul-up, Schapiro proclaimed in a statement.
As if that weren't enough, Schapiro has also commanded SEC staffers to speed up efforts to make sure exchanges have "specific programs" in place to ensure "the capacity and integrity" of the system.
The latest mishap is the kind of thing "that can raise concerns for investors about our nation's equity markets," she said.
But don't feel bad, Wall Street, you're still the best in the land. Schapiro called the U.S. capital markets "the most resilient, efficient, and robust in the world."
Despite being the best in the world, however, the U.S. stock market is still clearly vulnerable to technological snafus.
Schapiro acknowledged that "reliance on computers is a fact of life" for basically everyone. But that does not mean we should give up and let the computers take over.
We human beings "should endeavor to reduce the likelihood of technology errors and limit their impact when they occur," said Schapiro.
After all, that's why the SEC installed circuit breakers, which automatically turn stocks off when they get out of control, after the last time a trading algorithm ran amok in May 2010.
While those breakers helped limit the damage, the SEC can only do so much to stem the rising tide of technology.
In a message to the Knight Capitals of the world, Schapiro said existing rules make it clear that those who use computers to trade fast and trade often, "must check those systems to ensure they are operating properly."
Meanwhile, shares of Knight Capital (KCG) surged 60% Friday after two major online brokerage firms resumed trading with the "trusted partner," in the words of TD Ameritrade CEO Fred Tomczyk. Despite the rally in its share price, the outlook for Knight is murky at best. The brokerage firm is apparently being kept afloat through the weekend by a very short-term line of credit.
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