James Angel Calls for a Stock Market “Circuit Breaker”
Almost exactly one year before last Thursday’s stock market glitch, Associate Professor of Finance James Angel was testifying to the Securities and Exchange Commission about the need for a “shock absorber” to allow for corrections to human errors to be made before the computers that make stock market trades cause any major damage.
Little did he know that his voice would be heard again on the issue again this May. Once news hit of last week’s rapid 500-point drop by the Dow Jones industrial average, Angel was in high demand as an expert faculty source for the media.
“We have a market that responds in milliseconds, but the humans monitoring respond in minutes, and unfortunately billions of dollars of damage can occur in the meantime,” Angel explained in a New York Times interview.
Angel also was interviewed by several major business outlets on the issue, including The Financial Times, Bloomberg/BusinessWeek, The Wall Street Journal, CNN Money, and Smart Money. In addition, he appeared on ABC’s “World News Tonight,” Fox News, and others.
He still is calling for action to prevent similar incidents from occurring in the future. In a Forbes op-ed, Angel writes, “The solution is not to slow down our markets but to speed up our protections. We need a real-time circuit breaker that, when things go haywire, will automatically halt trading in individual stocks before the damage is done.”