A computer program glitch cost the Knight Capital Group $440 million over half an hour of out-of-control trading on the stock market. Similar U.S. market incidents have spurred Australian regulators to propose a "kill switch" that would immediately stop runaway computer trading.
The kill switch idea comes as part of new standards introduced by the Australian Securities and Investments Commission this week, according to the Los Angeles Times. Such ideas represent human efforts to regain control over lightning-fast stock market trading by computer algorithms.
A stock market dominated by computers can result in disastrous consequences when the tiniest software errors or glitches rapidly lead to millions or even billions of dollars being lost. Such was the case during the "Flash Crash" of May 2010 that briefly eliminated almost $1 trillion.
The U.S. Securities and Exchange Commission has also been considering new rules that would require stricter testing for computer trading programs. That may prove the minimum necessary action in a world where computers seem likely to take over even more financial trading in the future.
Source: Los Angeles Times