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The SEC and CFTC have issued a report of their findings regarding the market events of 6 May, 2010, the so-called “Flash Crash” incident.
Some market commentators have suggested that the joint SEC/CFTC report supports a return to the specialist-designated market maker system.
As a counterpoint to such suggestions we have pleasure in publishing Junius Peake’s 2009 comments on Release 34-60604 File No. S7-21-09 – “Elimination of Flash Order Exception from Rule 602 of Regulation NMS”
In a comment to Mondo Visione's “Exchange News Direct”, Mr Peake said:
“Market makers should only have regulatory requirements dealing with such things as short sale restrictions, but no requirement for anything to do with "when to trade." Requiring them to trade when they might not wish to do so will add unnecessary cost and inefficiency to the market.”
“And, given the fact that market makers lost much of the rationale for their existence just as the markets were turning electronic because of the increased volumes, now the volumes are so large that no market maker would be willing forced to trade when they don't want to do so.
