Capital Markets Subcommittee Chairman Convened First Congressional Hearing to Examine May 6 "Flash Crash"

WASHINGTON - Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, today joined in releasing and commented on the report of the staffs of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues regarding the findings of the events of May 6, 2010, when major equities indices, individual stocks, and exchange traded funds rapidly fell and quickly recovered within a matter of minutes.  Chairman Kanjorski convened the first congressional hearing on the "flash crash" on May 11, 2010.

"The SEC and CFTC report confirms that faster markets do not always lead to better markets," said Chairman Kanjorski.  "While automated, high-frequency trading may provide our markets with some benefits, it can also carry the potential for serious harm and market mischief.  Extreme volatility of the kind we experienced on May 6 could happen again, as demonstrated by the volatility in individual stocks since then.  To limit recurrences of that roller-coaster day and to bolster individual investor confidence, our regulators must expeditiously review and revise the rules governing market structure.  Congress must also conduct oversight of these matters and, if necessary, put in place new rules of the road to ensure the fair, orderly and efficient functioning of the U.S. capital markets.  The CFTC-SEC staff report will greatly assist in working toward these important policy goals."

Click here to view the full SEC-CFTC report, which can be found at the House Financial Services Committee's website.

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