Several of the major U.S. exchange operators on Tuesday said
they have agreed to a series of proposals aimed at improving the
infrastructure of markets.
The proposals come after a run of recent breakdowns--two at
Nasdaq and one at NYSE. Following the glitches, the Securities and
Exchange Commission in September set a 60-day deadline for
exchanges to strengthen their technology, and exchange executives
have since brainstormed ways to build better backup systems.
The agreement announced Tuesday includes "proposals designed to
improve operational resiliency, strengthen interoperability
standards and disaster recovery capabilities, enhance governance,
accountability and transparency, and establish a clear testing
framework for the industry," according to a press release from the
exchanges and the SEC.
The agreement also addresses improvements to critical
infrastructure, trading halts and breaking of trades. The groups
added they are still working on a proposed common "kill switch" to
prevent market disruption.
The exchange operators came together at the request of SEC
Chairwoman Mary Jo White, who said in September that exchanges and
regulators need to focus on rebuilding confidence that markets will
be able to operate in all kinds of trading environments.
A potential cooperation between NYSE and Nasdaq grew out of
those discussions, the people said.
As competition among exchanges and other trading platforms has
ramped up in recent years, critics say exchanges have fallen short
in their regulatory responsibilities as they seek to lure trading
to their systems.
Last week, options exchange heads said at an industry conference
in Chicago that meetings had been productive, and that they were
close to uniform policy on how to handle erroneous trades.
Differing rules at the 12 U.S. options exchanges allowed Goldman
Sachs Group Inc. (GS) to emerge largely unscathed after it
mistakenly issued waves of orders to trade stock-options contracts
for prices well off the prevailing market rate.
Write to Geoffrey Rogow at geoffrey.rogow@wsj.com and Kaitlyn
Kiernan at kaitlyn.kiernan@wsj.com
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