SEC Chairman Mary Schapiro spoke to attendees at the Investment Company Institute's General Membership Meeting in Washington D.C. Friday, the first anniversary of the so-called stock market "flash crash."
On May 6, 2010, the Dow Jones Industrial Average plunged almost 600 points in 5 minutes, having already lost 4% earlier in the day. The market partially recovered, finishing down 347 points.
As The Associated Press notes, it amounted to “the blink of an eye relative to the decades needed to save for retirement.”
Regulators and stock exchanges are trying to prevent a recurrence. According to the wire service, they've put circuit breakers in place temporarily to briefly halt trading of certain big stocks that veer wildly. The Securities and Exchange Commission is considering longer-term requirements that would bar any trades outside a specified price range. Meanwhile, there hasn't been a comparable stock-market glitch in the past year, and volatility has eased.
“But the significance of May 6 is greater than the investor harm caused by these wild swings in prices–it lies in the significant blow to investor confidence this volatility delivered, as well,” Schapiro (left) said. “Because, while every investor accepts financial risk as a fact of life, they operate under the assumption that America’s markets are structurally sound – that the funds you represent and the investors you advise could confidently entrust their capital to the world’s most sophisticated financial markets.”