Chaos via Control

Regulations, Enforcement Create Risk in the Complex and Rigid Markets

The Flash Crash should have been the impetus for serious reconsideration image_0of the structure of our national markets. But in the five years since its occurrence, assumptions have not been re-examined. The market’s complex and interconnected structure, which regulations mandate, increases the likelihood of destabilizing failures. Despite extensive study, and a recent indictment, regulators have not fully grasped the lessons of the Crash: a simpler set of rules would result in a market more resistant to explosions of volatility.

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