Tough-as-nails regulator Mary Jo White on Thursday ordered stock exchange bosses to come up with a plan in 60 days to fix Wall Street’s most nagging problems — its broken technology.
The Securities and Exchange Commission boss, irked that a fragile network of computers led to a three-hour shutdown of Nasdaq trading last month, told the group at a morning meeting to formulate a “comprehensive action plan” to address the problem.
Faulty markets could erode confidence on Main Street, White fears.
“In short, I also want those at the meeting — with input of other market participants — to identify a series of concrete measures designed to address specific areas where the robustness and resilience of market systems can be improved,” White said in a statement after the three-and-a-half hour meeting.
“The investing public deserves no less,” she noted.
White ordered the bosses from Nasdaq and the New York Stock Exchange to her Washington office immediately after Nasdaq’s most recent three-hour outage that gripped the markets on Aug. 22 — halting trades in 2,700 stocks.
One area of focus was fixing the so-called securities information processor, or SIP, which was at the heart of Nasdaq’s problem three weeks ago.
Like a teacher scolding students, White asked exchange bosses to do homework around improving exchange platforms, including:
–Better testing standards
–Protocols around disclosing when problems emerge
–Rules to allow the implementation of “kill switches” that would allow exchanges to nix bad trades.
White is keeping the exchange heads on a short leash — ordering them to check in with her in a week.
White, a no-nonsense former federal prosecutor, ran a tight meeting, allocating about 15 or 20 minutes for five separate topics around exchange problems, sources said.
Talking over coffee, tea and water, the exchange bosses were allowed to talk openly about recent problems that have caused breakdowns in trading, including Goldman Sachs’ faulty options trades and Nasdaq’s epic shutdown.
Exchange officials voiced the belief that kill switches, which have been talked about but never implemented, would have averted such glitches.
One snafu last year resulted in Knight Capital losing $430 million and being forced to sell itself to Getco.
White, in a statement, described the meeting as very “constructive.”
Other attendees agreed.
“Today’s meeting organized by the SEC was an important and constructive step forward to address the soundness and reliability of critical infrastructure underpinning the US capital markets,” Nasdaq boss Bob Greifeld said in a statement.