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Flash Crash Report Likely to Avoid Overkill

Based on the "body language" of government officials, traders assembled for the Securities Traders Association annual meeting in Washington are concluding that the Flash Crash Report is unlikely to include a long list of items that need to be changed immediately.

SEC Chief Mary Schapiro, SEC Trading and Markets Director Robert Cook, and FINRA's Tom Gira have all spoke of the need to "go slow" on regulation.

"We want to fix things, but we don't want to overfix things," Gira told traders today.

This suggests that the laundry list of immediate action items will be short. Most agree it will include:

1. Tweaking the circuit breakers, specifically reducing the number of trading halts by implementing "limit up-limit down" rules that would that would permit trades to be executed within a range tied to the best bid and offer.

2. Eliminating stub quotes and tightening the obligations of market makers.

3. A consolidated audit trail that will allow the SEC to quickly pull up and analyze trading data.

4. Traders are divided on whether the SEC will require high frequency traders above a certain volume will to register with the SEC and be subject to minimal risk compliance checks.

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