In an effort to control the machines on Wall Street, “kill switches” are getting closer to a reality as a way to tap the brakes on frenzied trading powered by high-tech computers.
That was at least one of the broad themes that emerged from a day-long round table hosted by the Securities and Exchange Commission in Washington, DC, yesterday.
“I think everyone here has agreed to the idea of a kill switch. . . . It’s then a matter of how you implement it,” said Lou Steinberg. chief technology officer at TD Ameritrade, during the final session.
Wall Street heavyweights including market makers, exchange operators and other industry experts offered up their best suggestions during the six-hour-long confab.
But the concept of a so-called kill switch, which would either shut down errant trades or trigger approvals for certain types of trades, became a consistent refrain.
Some market players urged more complex kill switches that are “dynamic,” which can properly identify fat-finger trades and recognize funky market situations.
SEC Chairman Mary Schapiro, who spoke sparingly during the lengthy discussions, however, urged market participants to endorse a solution that was less complex.
“It feels like we’re adding a lot of complexity,” said Schapiro at one point during the afternoon session discussing the idea of kill switches.