Post-'flash freeze' sentiment is 'get used to it'

Post-'flash freeze' sentiment is 'get used to it'

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Adam Jeffery | CNBC Amid the outrage and calls for change, Wall Street insiders took Thursday's "flash freeze" shutdown of the Nasdaq exchange as little more than a sign of


the times. With electronic trading getting faster and faster and systems more and more complex, investors probably need to acclimate to an environment where bugs periodically come up that


can shut down systems indefinitely. "The flash crash, Knight Trading, Goldman Sachs, automated trading issues in China last week and now the Nasdaq yesterday. Not sure we need to say


anything other than 'get used to it,' " said Nick Raich, CEO at The Earnings Scout. Indeed, all the furor over the trading glitch that shut down the Nasdaq—the second-largest


exchange and the primary platform for trading tech stocks—resulted in no ostensible market damage. (_Read more_: Nasdaq shuts down, but stock market shrugs it off) Stocks finished higher


Thursday, breaking a week-long losing streak, and traded up Friday. Still, market veterans pondered what needs to be done to prevent the kinds of issues that came into full view with the May


6, 2010, flash crash and have persisted since. "The whole system that we're building in the trading environment is so complex that there's a limited number of people who


understand it," said John Edge, head of capital markets business development for NICE Actimize, a compliance solutions provider for financial and government institutions. "The


checks and balances and controls were weak, and they continue to be weak." (_Read more_: Nasdaq CEO 'disappointed,' faults 'other person') Edge previously worked in


systems management for JPMorgan Chase and Lehman Brothers, so he has seen the evolution of electronic trading. What he's witnessed hasn't exactly given him high hopes for the


future unless authorities get a stronger grasp on the technologies controlling the market and what can go wrong. "I believe this can happen again. Our world is incredibly complex and


we've got to be aware of it," Edge said. "The federal agencies have to work with private companies to do their best to protect the integrity of the markets." One of the


key issues at this point appears to be cost. (_Read more_: Wall Street asks:Why can't Nasdaq get it right?) Trading firms haven't been devoting the resources necessary to keep up


with the ever-increasing market demands of a more complex environment. "If it's a question of a purely technology issue, do regulators really want to get involved?" said Brad


McMillan, chief investment officer for Commonwealth Financial, an independent broker dealer that manages $71 billion for clients. "You can make an argument that they do, but


there's going to cost and it has to be balanced." Edge believes that's a cost the market is going to have to bear. "There's only so much a human can do," he


said. "This is ridiculously difficult stuff to control." —_By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter._