Newsmakers

O'Hara advises SEC on "Flash Crash"

By Robert Preer

Johnson Professor of Finance and Management Maureen O'Hara played an instrumental role on the Advisory Committee on Emerging Regulatory Issues, formed by the Joint Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). She spoke with multiple financial press outlets following the release of the committee’s report about its advice to adopt a restriction called a “trade-at rule” that would prevent venues and brokerages from executing orders within their walls unless they improve pricing by a specified amount versus the market’s best level. O’Hara told Bloomberg: “The trade-at rule ‘might affect the business models of a number of firms. This is not a trivial change.’” (“SEC May Risk Harming Investors with ‘Trade-At Rule’ for Stocks,” Feb. 19).

The committee also said stock pauses and limit-up/limit-down price bands would help reduce investor fears about how markets react in times of uncertainty. “What market regulation now has to do is limit uncertainty,” O’Hara told Reuters (“‘Flash crash’ panel calls for US market overhaul,” Feb. 18). “You limit uncertainty by limiting the amount of movement a price can have before it falls off the map.”