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) 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.

It seems that the machines ran amok before people regained control of the system and kicked in a rebound. But what triggered the machine reaction?

Some look at the precipitous drop in Procter & Gamble ( PG) shares -- the stock dropped as low as $39.37 May 6 before recovering to $60.75, a 2.3% decline.

Trades in a number of other stocks were ultimately canceled by the Nasdaq, which decided to annul trades of stocks that moved 60% above or below the last price at 2:40 p.m. and 3 p.m. EDT Thursday. It put out a list Friday of what trades would be affected, including stocks such as Accenture ( ACN) and Exelon ( EXC) that saw orders drop to a penny a share or lower. Both stocks currently trade at more than $40.

Clearly the exchanges, brokerages and regulators are all confounded and confused about what happened last week. And four days later, no one seems to have been able to piece it all together. It's absurd that no clear record exists.

I seriously doubt that the NYSE's Niederauer or the Nasdaq's Greifeld understand all the myriad ways machines from all around the world are able to gain access to the digital markets. Schapiro won't learn much from them.

And therein lies the real problem. How can the markets be regulated when access to the markets isn't?

--Written by Glenn Hall in New York.

You can also follow my outrage on Twitter
TheStreet's editorial policy prohibits editors and reporters from holding positions in any individual stocks.

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