U.S. securities regulator to give more guidance on trading errors
NEW YORK Oct 10 (Reuters) - The U.S. Securities and Exchange Commission plans to give further guidance on a rule aimed at stopping erroneous trades from entering the market as the regulator works with exchanges and brokers on reducing operational risk, a SEC official said on Thursday.
Trading firm KCG Holdings Inc, the successor company to Knight Capital Group, is near a settlement of around $12 million with the SEC related to last year's trading glitch that disrupted equity markets and led to Knight's sale to rival Getco, sources told Reuters two weeks ago.
Knight disclosed in November that it was being formally investigated by the SEC on whether it complied with the "market access rule." The rule requires brokers to put in place risk controls to prevent the execution of erroneous trades or orders that exceed pre-set credit or capital thresholds.
"We still view around here the market access rule as carrying an awful lot of freight," James Burns, deputy director of the SEC's Division of Trading and Markets, said at an Investment Company Institute conference.
"It's an important tool at our disposal and we are hoping to give further guidance out about that before too long and there are going to be instructive instances we'll all have to talk about with respect to market access."
On Aug. 1, 2012, a glitch at Knight caused millions of unintentional orders to flood the market over a 45-minute period, leaving the firm with a huge position it had to unload at a total loss of $461.1 million.
The incident was one of several high-profile technology problems that jolted the securities industry the past couple of years.
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