I am often an apologist for our market structure. I believe in the efficiencies of eletronic trading and competition. I have a deep affection for U.S. equity markets but perhaps this affection is a bit misplaced. My apprenticeship in equity trading was at Datek Online, where our mission was to bring retail investors the same type of cost structure and trading tools that were only available to institutional players.
But like another famous claim of Mission Accomplished, we may have created as much danger as freedom.
The events over the last two years – and 2012 alone – must force anyone with even the most basic level of skepticism to question the current state of U.S. equity markets. Our intermediaries are failing us.
It is simply astounding that the type activity that occurred yesterday at the opening bell went on for minutes upon minutes without some real time intervention from regulators, exchanges or brokers. All I keep saying to cheer myself up is thank heavens it was just money.
As an industry, it seems we are not collectively implementing measures that would effectively protect our public from this kind of egregious error.
If limit up/down would have dampened the impact, then shame on us for moving at a snail's pace toward its reality.
Single-stock circuit breakers do not kick in until well after the market open, wild swings that occur at the open do not trigger the halts. And ironically, the original expiration date for the single stock circuit breaker pilot program was Tuesday, July 31.