UPDATE 1-US SEC roundtable on technology glitches set for Sept.
By Sarah N. Lynch
WASHINGTON Aug 8 (Reuters) - U.S. securities regulators will convene a roundtable next month to discuss ways to promote market stability after a recent series of technology glitches put another dent in investor confidence.
The Securities and Exchange Commission's Sept. 14 meeting will allow experts to discuss ways to ensure there are proper controls in place surrounding automated computer trading, and how to protect the market from technology failures. A list of participants has not been released.
SEC Chairman Mary Schapiro first announced plans for the roundtable last week, but did not give a date. Her announcement came just two days after a software error left Knight Capital Group with $440 million in trading losses. The brokerage was nearly forced out of business until it secured a $400 million bailout from a group of independent investors in exchange for a 73 percent stake.
"Reliance on technology has enabled the markets to achieve extraordinary levels of speed and efficiency," Schapiro said in a statement on Wednesday. "But with technology comes a responsibility for getting it right, minimizing errors and protecting the interests of investors."
The SEC has been grappling with a number of technology mishaps in recent months.
Nasdaq OMX is under investigation by the agency for its botched handling of Facebook's initial public offering.
Also earlier this year BATS Global Markets suffered a technology glitch that led it to pull its own IPO.
The SEC has been exploring numerous possible market structure changes for the past few years in response to the rise of automated trading.
It implemented a handful of reforms after the May 6, 2010 "flash crash" when the Dow Jones Industrial Average plunged about 700 points before rebounding.
But the pace of rulemaking on market structure matters soon slowed as the agency struggled with the workload stemming from the 2010 Dodd-Frank Wall Street reform law.
The recent string of events has prompted the SEC to kick back into high gear on market structure issues.
Last week, Schapiro said she would work to expedite efforts to propose a new rule that will require exchanges and other trading venues to have programs in place to ensure the integrity and capacity of their systems.
Schapiro outlined plans for this rule more than a year ago, saying it would be an improvement over the current so-called "automation review policies" that exchanges follow today.
Automation review policies are voluntary guidelines that aim to ensure market centers have the capacity to deal with glitches that can send markets into a tailspin.
A person familiar with the matter told Reuters recently that a draft of the rule has been sitting within the agency for quite some time waiting to be reviewed.
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