Chair of the Securities and Exchange Commission Mary Schapiro said the SEC is considering rules for high-frequency traders amid concern that they might have triggered the May 6 “flash crash.” Schapiro said the SEC is looking into whether such traders should be obligated to make trades to preserve liquidity. “Some could argue that May 6 was an aberration — another perfect storm — and now that it has passed markets have naturally adapted leaving no need for a comprehensive review of our market structure,” Schapiro said. “I disagree.”
Of major concern for the SEC are reports that individual investors have been fleeing the stock market in large part due to the “flash crash.” Schapiro noted that brokers have informed the SEC that retail investors “have pulled back” from the market since May 6.
However, the investor pullback from equities may have more to do with a fundamental change in thinking about investing. During the past decade, young investors have become less interested in taking on risk, surveys have found. Experts said financial crises have shaped the investment strategies of young investors. Most investors have become increasingly cautious, but those younger than 35 have made the biggest changes.
Gregg D. Killoren
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