Changes to Flash Crash Rules

On Thursday Canada’s investment industry regulator, IIROC, proposed new safety measures intended to prevent future flash crashes like the one that happened on May 6.

Existing “circuit breakers” halt trading when the entire market rises or falls extremely quickly within a short period of time, but trading in individual stocks must be reviewed manually. This new proposal would allow trading to automatically be halted for a five minute period on any stock that appears to be subject to a “flash trading” scenario.

The plan is to prevent the extreme investor losses we saw in May, when some stocks lost up to 99% of their value in minutes.

IIROC has invited public comments on the proposal during the next 60 days. Read the press release here.

 

 

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Financial Train Wreck

Stephen Roach, chief of Morgan Stanley’s Asia unit, says that Asian economies will not be able to withstand the “Tsunami” of American cash which Bernanke is flooding into the financial markets.  http://www.bbc.co.uk/news/business-11756677

American fiscal policy is a train wreck that is set to sideswipe the rest of the planet. The little guys are likely to get squashed.

I see inflation becoming a threat before the global economy has had time to fully recover from the recession. We could be facing a period of stagflation which would be as bad or worse than what we have seen so far. It would most certainly drag out the jobless recovery in the US for a very long time.