This transcript is automatically generated
-- article we've talked a lot about Knight capital for obvious reasons here over the last a few days but you put it all together we've had the flash crash we've had the FaceBook.
IPO and now this debacle at Knight capital in the SEC wants tighter rules for trading systems after that software glitch and all of those other stories soap.
We've well Harvey -- today on the latest developments former chairman of the SEC -- -- CEO of collar around partners he's in -- in Washington DC good to see you.
Pitt and we start with with Knight capital could this or should this particular individual situation have been avoided.
Well I think -- should have been subject to tighter restraints apparently night changed its algorithmic formulas.
And didn't have adequate testing before they went into effect.
There's really no excuse for that kind of conduct and the rules should have prevented that.
Should happen don't write that -- -- nothing so you're gonna be -- say just are people are watching that you're not capital and you have a new system.
Did you want to implement and it's gonna go into effect on on Monday and you say -- we're gonna put this inflation don't have to do.
Tests that at least it is with that the government having looked out at an -- the first.
You don't have to tested.
Although I think the SEC is now indicated that.
It will move to require -- thing.
But it seems to me -- of flash crash and other type situations where we're seeing technology.
Having defects and it there have to be fail safe systems that prevent the kinds of disasters we've seen of late.
Okay because that was one of the questions and it always is when something.
Don't like -- is she mentioned the flash crash and that's the FaceBook.
IPO on the issues there.
NASDAQ and everywhere it -- something like this happens people say do you need new rules.
In this area I think so I'm generally.
Not of the view that you just throw world a new rule and any problem that arises.
But technology concerns have been multiplying.
And there is a real need for government.
To become more aggressive than making sure that firms have the kinds of systems.
That will protect investors from this kind of mayhem.
It seems to me it's always difficult to stop advancement and anyway whether it's it especially technological advancement if if computer systems are gonna take over for humans in just about any industry they eventually do.
But -- again things like this -- some people say we need more human involvement -- this wouldn't have happened or things like this didn't happen -- humans.
Were more involved than than computers -- do you stand on that.
Balance -- that back and forth.
Well I think that.
Either with computers or with humans the risk of failure is always present and therefore one shouldn't assume.
That moving back to having human beings handle all of these things will somehow.
Provide an -- salute.
Fail safe mechanism.
What I think is required.
Is to have -- That is to say that if you're going to implement new algorithms.
They have to be thoroughly tested first.
They have to be certified.
And responsible people -- to approve -- going into effect.
And I think it's interest thing to stand up.
With you today that somebody who let it not necessarily would be pre disposed to say hey we need you rules we need more regulation is saying in this case maybe we -- right.
Right not Harvey Pitt it's always good to have you on and thanks for joining us on this on this topic take care -- to be.