SEC staffing
April 25, 2013 7:17 AM   Subscribe

Does the US Securities & Exchange Commission have computer scientists on staff who can parse trading algorithms? Or is its staff primarily lawyers and accountants?

This question arose in the context of talking with a friend about the sudden and temporary crash in the stock markets earlier this week when a Reuters Twitter account was hacked and a false tweet about explosions at the White House was sent out.

We were speculating whether the SEC has the ability to parse and understand traders' algorithms.

Thanks for any insight anyone has.
posted by dfriedman to Law & Government (8 answers total) 2 users marked this as a favorite
They absolutely do have some, though it's not clear to me from more recent news whether they actually have full access to those algorithms right now.
posted by Tomorrowful at 7:29 AM on April 25, 2013

They do. I have a relative who works for the SEC that is neither a lawyer or accountant. He is a former trader. They have hired both industry professionals to look at trading from that perspective and they have hired a lot of programmers. Look at the USA job filings for the SEC.
posted by JohnnyGunn at 7:31 AM on April 25, 2013

Here's one relevant job listing. That's in the exam division, but there's also the SEC's Division of Risk, Strategy, and Financial Innovation, which is sort of think-tanky.

I've never been witness to an actual SEC exam, but my understanding is regardless of whether they have someone on staff who could have created your algorithm, they'll make you explain exactly how it works to them until they understand it (or at least feel like they understand it). And it's certainly in your best interest to make sure they understand it, given that the default (with good reason) is if I can't understand it, it's surely bad. And the SEC has lots of smart people! Much love to the SEC.
posted by Admiral Haddock at 7:31 AM on April 25, 2013

Here is a job posting from the middle of 2012 for "Quantitative Research Analysts (Financial Engineer)" and here is a news article about the Quantitative Analytics Unit.
posted by knapah at 7:32 AM on April 25, 2013

Thanks, these answers were exactly what I was looking for.
posted by dfriedman at 7:35 AM on April 25, 2013

Just to note, it was Associated Press whose Twitter was hacked, not Reuters (at least not yet).
posted by payoto at 7:37 AM on April 25, 2013

Whoops, sorry, you're right.
posted by dfriedman at 7:41 AM on April 25, 2013

I have been in an SEC exam where they ask you all about your trading strategies. They will ask questions and ask for a description in writing. I assume that was so they could take it back to their experts and let them have a go at it. This applies for both automated strategies as well as manual ones.
posted by JohnnyGunn at 7:49 AM on April 25, 2013

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