For hundreds of years, physical paper documents and human beings dominated our securities operations. Today, data dominates. Digital data is part of every aspect of our markets. And this new reality is challenging all of us. The proliferation and reliance on data has disrupted our markets - oversight and regulation need to evolve to keep pace. In this new world, we need new tools.
This "Flash Crash" should have been a wake-up call to all of us. It demonstrated that our markets had, in some ways, outpaced their keepers. This was the largest, but not the last flash crash. Other mini flash crashes continue to occur in our markets.A recent example that demonstrates some of the potential pitfalls of over reliance on technical and algorithmic trading occurred on April Fools' Day this year. A Tesla press release jokingly announced a new "W" model for a watch. It was clearly intended as a joke. However, it was taken all too seriously by computers dutifully executing their algorithms in response to the press release. The algorithms didn't quite get the joke, trading hundreds of thousands of shares and spiking the stock price within one minute of the issuance of the release.