Hearing of the House Agricultural Committee - Peterson Statement at Hearing to Examine Rule on Regulation Automated Trading

Hearing

"Thank you Mr. Chairman.

"A little more than six years ago, broad based stock indexes collapsed and then rebounded over the course of about half an hour -- the Dow dropped by nine hundred and ninety-eight points in a few minutes, the largest intra-day point decline in its history.

"Subsequent research by the CFTC and SEC determined three factors combined to cause this "Flash Crash" -- algorithmic trading activity, obscure order submission methods and an automated trade execution program to sell 75,000 stock index futures.

"Since the Flash Crash, there have been between 15 and 30 similar disruptions every single year in markets ranging from Treasuries to crude oil and agriculture futures.

"With Regulation Automated Trading, the CFTC has proposed some rules to try to prevent future market disruptions caused or made worse by automated and algorithmic trading. This rulemaking is still open and the CFTC continues to work to get it right.

"I hope that this hearing adds to our understanding of this complex issue and assists the CFTC in its rulemaking. I look forward to today's testimony and yield back."

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