This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SEC Must Look Beyond NYSE, Nasdaq for Cause of Market Crash: Today's Outrage

Adds SEC statement on meeting with exchange leaders about Thursday's stock market crash.

NEW YORK ( TheStreet) -- Securities and Exchange Commission Chairman Mary Schapiro is looking in all the wrong places for answers to last week's historic market plunge.

Four days after the collapse, Schapiro met today with NYSE Euronext (NYX) CEO Duncan Niederauer, Nasdaq OMX (NDAQ - Get Report) CEO Robert Greifeld and leaders of other exchanges. What a waste of time, judging by the SEC's post-meeting press release, which said only that "as a first step, the parties agreed on a structural framework, to be refined over the next day, for strengthening circuit breakers and handling erroneous trades."

More Transparency Isn't the Answer (Forbes)

Instead, Schapiro should be talking to executives at companies like Terra Nova Financial (TNFG) and other regulated broker-dealers that allow unregulated clients to piggyback on their access to the exchanges.

While Terra Nova says it's not aware of any link connecting it to unusual trading activity on the day of the so-called "flash crash," the brokerage should be called to explain how it manages risk related to the direct access to the exchanges that it provides clients.

This whole notion of leasing unfiltered access to the exchanges, known as "sponsored direct market access," is like letting the guards sell the keys to the vault. Who thought that was a good idea?

It's not that Terra Nova necessarily did anything wrong -- sponsored direct market access is currently allowed by regulators and Terra Nova is not alone in offering the service -- but this is clearly not a good idea. The practice makes a mess of the system and muddies the waters in terms of oversight.

So far, it doesn't seem like anyone has a clue about how trading spiraled out of control and caused the Dow Jones to drop nearly 1,000 points in a single day.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
NYX $0.00 0.00%
ACN $107.46 0.00%
EXC $27.62 0.00%
NDAQ $58.87 0.00%
PG $75.70 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs