[  by Melanie Gretchen ]

Volume-based surge protection is getting some attention on Wall Street as an answer for re-engaging terrified investors to the marketplace.  It doesn't take much to scare individual investors, but they are really "spooked out" by the seemingly uncontrollable nature of the equities markets - e.g.,  the Flash Crash of 2010, which dropped the Dow Jones Industrial Average by 1,000 points in a matter of minutes;  and then there's Knight Capital's trading program that belched out millions of unintended orders that created multi-billion dollar portfolio that, when finally liquidated, left Knight in the hole by some $440 million.

Which is why Georgetown professor James Angel and Issuer Advisory Group CEO Patrick Healy are recommending volume surge protectors as the best alternative to safeguarding the markets and its participants, while restoring Main Street confidence in Wall Street.  Prof. Angel says that some of the out-of-control trade activity caused by "unleashed computer programs" could be diminished if surge protectors were in place.  To this end, he is expected to submit a comment letter to the SEC as early as Wednesday.  The letter is likely to outline a process which can assist investors in deciphering the "integrity of the data" they receive during hectic trading.

"Investors tend to pull out of the markets [causing liquidity to dry up] when they don’t believe the data that they are seeing.  We should be thinking about many dimensions of technology in monitoring stock trading activity." -- Prof. Angel, visiting professor at U of P's Wharton School.

For further details, go to [NY Post, 9/6/12].