This week much debate occurred over how the alleged suspect in the failed Times Square bombing was able to get through security and board a plane to flee the country. The debate also focused on how this individual was able to gain U.S. citizenship. This leads to the question, have our security procedures become weak and are our enemies testing us to discover where our weaknesses are?
In addition to this, the stock market dropped nearly 1000 points suddenly allegedly due to an error made on a stock sale. This occurred on the same day that economic unrest in Greece led to violence and market uncertainty. Regardless of whether the computer glitch was intentional or not, this incident exposes a weakness in the handling of electronic stock transactions. If one transaction of a sizable amount can cause such a rapid market decline, what is to prevent some enemy of our country, whether domestic or foreign, from hacking into the system and causing a market meltdown?
An article appearing in the Washington Post on Friday May 7, 2010 authored by David Cho and Jia Lynn Yang theorized that this failure of the system is a result of changes made in 2007. “The goal was to give investors more control over how their trades were executed and to guarantee the best price when they buy stocks” (Cho & Yang, 2010).
To accomplish this goal the changes allowed the routing of orders for stock transactions to the platform offering the best price. In other words, an order for a stock purchase was no longer under the sole control of the New York Stock Exchange but routed to several different platforms in order to find the best price. This has made it more difficult for the market to react to panic selling, evidenced by Thursday’s failure of the market to react to billion-dollar instead of million-dollar sale.
This has exposed yet another weakness in our national security, the security of our stock markets. There must be some way for the market to detect an unusual transaction such as occurred on Thursday and place the transaction on hold until it can be determined if the transaction in an error or not. However, we must be careful not to panic and place such stringent regulations on the market so as to restrict legitimate sales.
One recommendation would be to place transactions that are over a certain amount on hold until they can be investigated. We could freeze the price of that transaction so as not to harm someone seeking to make a legitimate sale. If the transaction is found to be legitimate, the sale could then proceed but if the sale is an error or suspicious (e.g. from a suspicious source) the sale would be stopped, avoiding the panic which occurred on Thursday.
September 11 taught us a valuable lesson, our nation has enemies. These enemies attacked our financial institutions (Wall Street), military (The Pentagon), and our government (The belief that the failed hijacking in Pennsylvania was to attack the Capitol or White House). Since that time, our country has been diligent and no further attacks have occurred. However, the events of this week have exposed some possible weaknesses. It is imperative that we strengthen these areas of weakness so as not to leave our enemies an open door to attack us once again. Otherwise, we may wake up some morning to another attack on our country, an attack that could not only result in the loss of innocent live but could also tip our sluggish economy and markets over the edge. We must remain diligent and strengthen our areas of weakness as we become aware of them.
References:
Cho, D. & Yang, J. L. (2010, May 7). Wild day on Wall Street leaves electronic
exchanges under scrutiny. The Washington Post, , . Retrieved May 8, 2010,
http://www.washingtonpost.com/wp-
dyn/content/article/2010/05/07/AR201005700643html?hpid=topnews
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