Twitter hack heightens high-frequency trading fears

NYSE.

A phony tweet from the hacked Twitter account of the Associated Press, which sparked a short-lived panic in the stock market a week ago, underscored the need to look at regulating automated trading, the top U.S. derivatives regulator said on Tuesday.

Hackers took control of the AP's Twitter account on April 23 and sent a false tweet about explosions in the White House that injured President Barack Obama. The news briefly wiped out $136.5 billion of the S&P 500 index's value before markets recovered.

People in the market blamed automated trading for the wild swings.

"I think that we do need to finalise a concept release that we've been working on for many moons here at the CFTC," Commodity Futures Trading Commission Chairman Gary Gensler told a public meeting of the agency on Tuesday.

The CFTC first announced it would come out with a concept release on high-frequency trading and other market structure issues last year.

But last week's events had reminded Gensler of the urgency of the report, he said.

Gensler said he hoped to put the concept release out in the next month or two, adding that the CFTC would seek public comments on it. A concept release constitutes the first tentative step toward possible rulemaking.

In Australia, corporate regulator the Australian Securities and Investment Commission has already conducted its own inquiries into high-speed trading and has invested in advanced monitoring tools to keep up with automated transactions.