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Knight Losses Spur Tighter Automated-Trading Rules From SEC

Regulator taking more action after post- "flash crash" safeguards prove non-sufficient.

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Aug. 8 (Bloomberg) — The U.S. Securities and Exchange Commission is writing new rules in the wake of Knight Capital Group Inc. losses that could turn longstanding policies for how exchanges manage their automated systems into regulations.

After Knight suffered a $440 million trading loss Aug. 1 that almost put it out of business, the SEC began work to bolster existing policies meant to ensure the exchanges’ systems can safely handle trading demands, according to a person familiar with the SEC’s work who spoke on condition of anonymity because the process isn’t public.

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