Feeds

Industry group blames 'outdated' kit for stock-market tech disasters

Thirty year old gear is good for one-second trades, not millisecond trades

Beginner's guide to SSL certificates

A US trade association for the stock market industry has called for an overhaul of the "outdated" technology systems that exchanges used for their share trading.

The Securities Industry and Financial Markets Association (SIFMA) also told the Securities and Exchange Commission (SEC) that it was imperative that brokers, dealers and other participants in the investment community were able to contribute to the reforms.

The SEC has already said that after outages at the NASDAQ exchange, the securities information processors or SIPs, which compute quotations and the price of stocks, need to be reviewed by self-regulatory organisations.

SIFMA said in a letter to the commission that the problem with the SIP systems was that they were too old to support current markets.

"The system was designed more than 30 years ago, and it has been nearly a decade since the commission examined the issue, which was at a time when the benchmark for execution speed was one second," the association wrote.

"Over that time, markets have evolved dramatically through the processing power of today’s technology – with execution times measured in milliseconds and microseconds – as well as widespread retail investor participation in the markets, decimalisation, the exponential growth of daily trading volume, and the for-profit status of the securities exchanges."

The industry body added that the system was underfunded and suffered from a lack of transparency, competition and insulated governance.

"We believe the time is ripe for reconsidering how the SIPs are governed, controlled, and operate under the commission’s oversight," SIFMA said.

"We urge the commission to work with the self-regulatory organisations and industry members to examine the operation and organisation of the SIPs more broadly and develop broader action plans for the SIPs that revamp governance and address conflicts of interest, increase transparency in operations, and provide for increased efficiencies, including the introduction of competitive forces."

The SEC's review was sparked by both the Facebook IPOcalpyse last year and another outage on the NASDAQ in August when trading was halted for three hours.

The commission has told self-regulators to look into five issues it has with the SIPs system, including kill switches for any exchanges that don't already have one to isolate them from the rest of the markets. ®

The next step in data security

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.