Small slap on wrist points to algo issues

Are we in for more of this? The SEC has levied a fine, albeit small, on Credit Suisse "for poorly supervising the development and execution of an algorithm that clogged the exchange's order processing system and severely delayed messaging traffic on five NYSE-floor trading posts," reports Securities Industry News.

Algorithmic trading of course has made great leaps in the industry, and has become widely accepted as a form of automated order execution. The problem at Credit Suisse stemmed from a single proprietary trader who manually changed the limit prices for unexecuted orders, resulting in an electronic loop and hundreds of thousands of unintended messages sent to NYSE.

The issue here is the ease with which this happened. You would think that trader/programmers would need some controls when making manual changes on the fly. You also have to wonder if this sort of mistake, no matter how innocent, could also occur in a sponsored environment. Obviously, it could if the sponsoring broker has inadequate or faulty controls. So banning naked access doesn't necessarily mean the end of all worries. 

For more:
- here's the article

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