The day after the Wall Street Journal revealed that the data analysis project that could fend off the next flash crash is woefully delayed, the president of the New York Stock Exchange Group said that the program can be done and should be completed.
But NYSE Groups Thomas Farley told CNBC host Bob Pisani at todays SIFMA Equity Market Structure Conference that the delays with the consolidated audit trail are not due to foot dragging among participants.
We are reckoning with the complexity with the markets, Farley told Pisani and the crowd of more than 200 patricipants.
The CAT is the large-scale, big ticket data analysis project that will give market regulators and industry participants a holistic view of the market. Its aim is to fend off a pending flash crash, like the events of May 6, 2010 when the dow dropped nearly 1,000 points in a single day.
Yesterday, the WSJ reported that the CAT is overdue and nowhere near completion.
In response to Pisanis question, Can we build the CAT?, Farley was positive. Sure. We put a man on the moon and built the Empire State Building and put people in offices within 12 months. And yes, we can build a CAT.
Farley added that the markets have implanted changes to reduce the chances of another flash crash.
The changes we have made have greatly reduced the chances of a flash crash. I would argue that along with safety and timeliness in the markets, we need to focus on simplifying the markets. We have had problems in the market but … they start from the fact that markets are so darned complicated.
Pisani asked the head of the NYSE Group if he feels that regulators such as the SEC and CFTC should be merged into a single entity with clearly-stated goals, Farley initially offered a No comment. He did, however, add that “If it didnt happen in Dodd-Frank it wont happen sooner.
Farley also sees a benefit to the Tick Pilot that was approved by the SEC yesterday afternoon.
Im pleased its done and we can move on. Its been [debated for] a long time. This was a push from Congress and not the industry. Once we realized it would be a fait accompli, we got on board, said Farley.
He admits to seeing a light at the end of the tunnel. “If in two years, we get some new and improved market structure and new data on stocks, if we can learn from this new data to tweak market structure over time, this could be terrific., he said.
When asked about the one year deadline – which is uncharacteristically tight for a capital markets project – Farley likened it to home project, which he admitted often result in crooked shelves. “My wife looks at me and says, Just get it done, he said.
The SIFMA Equity Market Structure Conference is taking place at the Grand Hyatt in midtown Manhattan today.
