The "Flash Crash" that occured in May 2010, which caused the Dow
to drop as much as 998 points in a matter of minutes, was caused by a number of events, including economic news out of Europe, earlier that day, and "significant sell orders coming into the market and the liquidity was drying up very rapidly," Gary Gensler, chairman of U.S. Commodity Futures Trading Commission, told CNBC on Friday.
"The second crisis...was in the equity markets, a very fragmented market," Gensler said.
Preventing another "Flash Crash" is dependent on the staff of the CFTC, SEC, and funding, he added.
"Without funding, I have less confidence and I don't know that we can do it. But properly funded in technology and people we do need to update our regulations to stay abreast of algorithmic and high-frequency trading," Gensler said.
"90 percent of the market is electronic trading, and much of it is algorithmic and high-frequency trading."
Gensler continues to make the case for more money from Congress for additional resources.
"We oversee a market that's only 40 trillion dollars, called the futures market. The swaps market it seven times that size, so we do need additional funding and short of that we'll still proceed on rule writing but we will not be able to protect the American public without additional funding," he concluded.
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