At a recent Security and Exchange Commission (SEC) Technology Roundtable, participants discussed the necessity of having in place more rigorous peer code review for software used in trading and other financial transactions, MNI News reported.
Software development expert and MIT professor Nancy Leveson addressed the gathering, criticizing financial sector companies for adding complexity to trading and exchange software even as other industries have limited complexity as a best practice, according to MNI.
The roundtable participants discussed peer review broadly, in regard to how software is developed and used by traders, the news source reported.
"As the morning panel concluded, the discussion appeared to converge on the concept of industry peer review to bring firms to converge on best practices, as more effective than trying to standardize software safeguards," wrote reporter Denny Gulino.
The regulators in attendance – including SEC Chair Mary Schapiro – did not make any announcements regarding rule changes. However, MNI pointed out that Schapiro and her colleagues not only heard from attendees, but also received written recommendations from organizations such as the New York Stock Exchange and Nasdaq.
The need for code of the highest quality in this realm is apparent, given the rise of computer-driven speed trading. In September, CNNMoney quoted MIT professor Andrew Lo as saying financial firms "have been badly stubbing their toes on the technology."
CNNMoney identified a number of instances in which computer-driven trades have gone awry, including an August trading glitch caused by a "rogue algorithm" that cost Knight Capital Group $440 million.