WASHINGTON Oct 25 A proposal that would require
stock exchanges to be better equipped to handle market
disruptions does not go far enough to hold senior officials
accountable for failures, Securities and Exchange Commission
member Luis Aguilar said on Friday.
"The final rule should require an entity's senior officers
to certify in writing that the entity has processes in place and
adequate resources and staffing to achieve compliance," Aguilar
In prepared remarks for a speech to a securities conference
in Atlanta, Georgia, Aguilar also reiterated his support for
strict corporate penalties and the agency's new policy of
seeking admissions in some settlements, rather than letting
defendants settle without admitting or denying the charges.
Aguilar said he also wants the final version of the market
disruption rule to do away with a "safe harbor" provision that
would shield exchanges and their employees from liability as
long as they have policies that are reasonably designed to
comply with the rules.
"Such a vague and unprecedented carve-out would water down
the rule," he said.
"The commission must adopt a strong and enforceable final
rule that allows us to hold firms and individuals accountable
when they fail to take adequate steps to comply with the rule."
The SEC proposed in March the "Regulation Systems Compliance
and Integrity," or Reg SCI. It followed a series of major
blunders in 2012, from Nasdaq's botched handling of Facebook's
initial public offering to Knight Capital's near
collapse following a $440 million software glitch.
The proposal targets exchanges, clearing agencies, certain
large "dark pool" trading platforms and other self-regulatory
It calls for these entities to report major systems
disruptions and conduct testing on an industry-wide basis to
ensure they have backup systems that are functioning properly.
The SEC delayed adopting the plan and reopened the public
comment period after exchanges including the Nasdaq and rival
NYSE Euronext, parent of the New York Stock Exchange,
called for a major reworking of the proposal over concerns about
its costs and an "unduly broad" requirement to disseminate
information to member firms about certain incidents.
Since then, SEC Chair Mary Jo White has vowed to press ahead
to finish the rule quickly in the wake of more recent technology
glitches, including a three-hour halt on the Nasdaq earlier this
summer due to a problem with the system that receives all
traffic on quotes and orders.
It is unclear how the final rule may shape up.
While Aguilar has been vocally in favor of a tougher version
of the rule, Michael Piwowar, a Republican SEC commissioner,
issued a statement following the Nasdaq outage that urged the
SEC to conduct more study "before moving forward with further