By Sarah N. Lynch
WASHINGTON, Feb 27 (Reuters) – U.S. securities regulators
said Wednesday they will convene a public meeting next week to
weigh new rules that aim to prevent software errors and other
problems from disrupting capital markets.
The Securities and Exchange Commission’s proposal comes as a
response to several high-profile technology debacles last year,
including Nasdaq’s botched handling of the Facebook
initial public offering and Knight Capital’s $440
million in losses due to a software error.
SEC Chairman Elisse Walter said earlier this month in a
speech that the rules being considered, known as “Regulation
SCI,” would require exchanges and other trading platforms to
perform business continuity testing. [ID nL1N0BJ8OD]
The rules would also require exchanges, alternative trading
systems and clearing agencies to provide notifications about
disruptions and meet certain technological standards.
The public meeting to discuss the rules will be March 6.
If the SEC ultimately votes to propose the rules, then they
will be issued for public comment. A second vote would be
required before they could be adopted.
The regulations to be considered would replace a long-time
voluntary standard known as “automation review policies” or ARP.
The SEC first developed ARP following the 1987 market crash.
ARP sets forth guidance for exchanges, some alternative
trading systems and clearing agencies to help ensure their
systems are stable, secure and have the capacity to deal with
glitches that can send markets into a tailspin.
By replacing the voluntary police with rules, it would
permit the SEC to take enforcement actions against entities that
fail to comply with them.
