Three days after a chilling plunge in stock prices and no closer to knowing why it happened, U.S. regulators faced pressure on Sunday to put up emergency measures to prevent a repeat of the episode.
Tempers were short in Washington. Lawmakers wanted to know why regulators had no answers while the Securities and Exchange Commission and Commodity Futures Trading Commission said not to look for quick explanations.
A source familiar with the situation said SEC Chairman Mary Schapiro has called chiefs from key exchanges to Washington on Monday to discuss different trading rules that each applies -- another area of suspicion in last week's unsettling moves.
Clearly the Securities and Exchange Commission needs to act, an exasperated Sen. Chris Dodd, chairman of the Senate Banking Committee, said on CBS's Face the Nation program.
They need to step up very quickly and let us know what happened here and what steps need to be taken, he said. I don't think you need legislation in this area. You need the regulators to step up.
Investors face a queasy opening for Monday markets, still jittery after last Thursday's nearly 1,000-point drop in the Dow Jones Industrial Average, followed by a rebound that still left prices down for the day. After another decline on Friday, stocks are now negative for the year to date.
In the absence of decisive action by regulators, the exchanges sought to strike a unified front after days of bickering that only added to a sense of drift in the world's biggest and busiest markets.
Ordinary investors, increasingly tied to market developments through their 401K plans and other investments that were whipsawed last week, faced the same dilemma over why and whether it might happen again.
BURY HATCHET, NOT IN ONE ANOTHER
NYSE Euronet and NASDQ OMX Group Inc. said they were committed to working closely with one another and with regulators to find out what happened -- a far cry from back-and-forth carping at the end of the week over whose computer systems might have been most at fault.
Dodd, who appeared on CBS with Republican Sen. Richard Shelby of Tennessee whose assistance he needs to steer a massive financial regulatory bill through the Senate, deplored the fact that sophisticated markets were so out of touch with the real economy that ordinary Americans must live in.
We need some answers pretty soon, he said, because unruly markets are a threat.
You are getting some of this casino environment that is appearing in our markets, Dodd said, fostering economic risk that will force the government's hand on regulation.
We need to get in place a bill, have the president sign it so that we have tools to protect our economy from these kinds of events, he said.
WHAT TO DO, WHAT TO DO
Sources said on Saturday that the SEC was considering whether trading restrictions could be imposed across markets for companies that have fallen a certain percentage within a specific time-frame, one source said. Another source said more circuit breakers at a stock level was another possibility.
Thursday's moves were so dramatic that it was unclear where to start. At one point, at least a half-dozen stocks including Accenture and Exelon Corp briefly traded for as low as a penny a share. Some trades had to be canceled.
Initially, it was thought a fat finger trading error might have triggered the plunge but that theory has gradually diminished and left increased attention focused on increasingly fast computer-driven trading platforms that can execute orders so fast they are hard to override when necessary.
That left traders heading into Monday's trade with still no clear answers about what might have caused Thursday's gyrations and no words of comfort from regulators to assure that a recurrence won't happen.
(additional reporting by Phil Wahba and Rachelle Younglai)
(Reporting by Glenn Somerville; Editing by Diane Craft)