SEC names flash crash specialist

Berman to wield Midas system for HFT analysis in new position to support SEC regulation making

The SEC has named a risk management specialist who studied the 2011 flash crash to head a newly created office charged with scrutinizing the impact of high-frequency trading (HFT) on markets.

Gregg Berman, who to date has worked as a senior adviser at the commission’s division of risk, strategy and financial innovation, will now head the office of analytics and research in the division of trading and markets.

The SEC says the new office will specialize in quantitative data analysis, trading, portfolio management and risk management. Besides research to help the SEC create policy regarding HFT, the office will analyze an array of issues including rule filings by exchanges, market structure and new products.  

‘Though the markets may be complex, they are not impenetrable, and I am confident in our ability to continue developing data-driven analyses to inform policy,’ Berman comments in a statement.

‘I am excited to take on these new responsibilities and honored to have the opportunity to continue working with such a talented and dedicated set of colleagues, both within the division and across the entire SEC.’

The office will also use the SEC’s newly acquired Midas system, which collects trading data from the NYSE and other exchanges. The system was acquired last year to help put the SEC on an equal footing with high-frequency traders.

The system ‘will for the first time allow the staff to analyze trading using the same tools and technologies used by some of today’s most sophisticated market participants,’ according to the SEC.

Berman, who joined the US market regulator in June 2010, studied for the commission the so-called flash crash of 2011 that sent the Dow Jones Industrial Average plunging more than 1,000 points in less than 20 minutes, and has studied HFT.

The creation of the new office, the acquisition of the Midas system and Berman’s promotion stem from the SEC’s increased efforts to cope with regulation concerning HFT.

Berman’s promotion also follows a leadership shake-up at the SEC that saw the resignations of chairman Mary Schapiro, head of enforcement Robert Khuzami, general counsel Mark Cahn, and Meredith Cross, the director of the division of corporation finance.

Before joining the SEC, Berman was a co-founder of New York-based risk management and corporate governance research firm RiskMetrics Group.

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