SEC expertise doubted amid hunt for selloff answers
U.S. lawmakers on Monday said the Securities and Exchange Commission likely has the authority to deal with reforms after last week's massive market selloff but questioned its expertise, as regulators still hunt for answers.
Senator Mark Warner, a Democrat on the Senate Banking Committee, said he talked to SEC Chairman Mary Schapiro late on Friday and said regulators were still scrambling for information.
I think the regulators have got the regulatory authority; what I wonder is whether they've got the technology knowledge, Warner said in an interview on CNBC Television. He said the SEC may need maybe a few less lawyers, and a few more technology quants.
The SEC is meeting on Monday with the heads of the leading U.S. stock market operators to address whether levers need to be added in trading systems to halt sudden plunges in individual stocks.
The sharp fragmentation of the U.S. stock marketplace has slowed regulators hunting for a cause of last week's mysterious market dive, a source familiar with the investigation said on Monday.
The SEC continues to aggregate data from the 50 some electronic trading venues, the source said, suggesting the fragmentation seen as a cause of Thursday's steep market drop is also hampering the search for answers.
The bone-chilling drop saw stocks usually regarded as safe inexplicably drop precipitously for several minutes before recovering most of the losses. It sent the Dow Jones Industrial Average into a 1,000-point tailspin and rattled investors worldwide.
The source, who requested anonymity because the probe is ongoing, said details still need to be hammered out on a proposed market-wide circuit breaker meant to slow or stop such drops in the future.
The circuit breaker would be based on the movement of specific stocks. Properly crafting and introducing it in the marketplace would ideally take time, although the SEC may push for quicker implementation, the source said.
Republican Senator Judd Gregg also said on CNBC that it is clear that regulators still do not know what happened.
Gregg said lawmakers should resist the urge to attach dramatic market reforms to the large financial reform bill moving through the Senate.
That could be a disaster, Gregg said. We really don't have any idea what happened, and I don't think anybody does yet.
(Reporting by Jonathan Spicer in New York; additional reporting by Karey Wutkowski in Washington, editing by Dave Zimmerman)
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