Emerging regulatory issues were on the bill for Friday as an advisory panel met in Washington to review a report on how to prevent another flash crash like the one that threw the markets into a panic on May 6.

The joint panel of the Commodity Futures Trading Commission (CFTC) and the Securities Exchange Commission (SEC) joined together in a public meeting to consider new market rules that might protect against computer-based crashes in the future.

On May 6 in the course of just 20 minutes, the Dow Jones industrial average plunged about 700 points then bounced back up again. The CFTC-SEC report found that the giant tumble was triggered by a single, $4.1 billion computer-initiated trade by a Kansas-based Waddell & Reed mutual fund that involved the sale of E-mini futures contracts.

The panel—comprising former regulators, market participants and economists—met Friday morning in a CFTC hearing room to receive a summary and recap from the staffs of the CFTC and SEC on the report issued Sept. 30. The day’s agenda included a report from the subcommittee on cross-market linkages, a report from the subcommittee on pre-trade risk management and a discussion about potential recommendations and responses.

Both CFTC Chairman Gary Gensler and SEC Chairman Mary Schapiro (left) were on hand at the Friday meeting to review what the report termed “a liquidity crisis” stemming from the E-mini contracts.

Calling for “open and candid” discussion, Gensler in his opening statement raised a number of technical questions that need to be addressed.

“Foremost, I’m interested in what the committee’s views are on how we protect market integrity in light of both the events of May 6 and the rapidly changing technology in the financial markets,” he said.

“More specifically, what, if any, additional risk protections should we consider with regard to the use of algorithmic and high-frequency trading?" Gensler continued. "Should we require exchanges and executing brokers to update risk mechanisms and rules for market pauses? If so, how? What thoughts does the committee have on cross-market linkages either with regard to circuit breakers or any other protections?”

Once those questions are answered, Gensler asserted, the joint committee will provide recommendations that the CFTC and SEC can implement to improve market integrity.

Read about SEC Chairman Mary Schapiro’s Sept. 7 speech on the flash crash at AdvisorOne.com.