The effort is part of the agency's response to the May 6, 2010, stock rout that temporarily sent the Dow down almost 1,000 points. The so-called flash crash was triggered by a mutual fund firm's algorithmic trade that sparked the rapid selling of futures because it took into account volume but not price or time, according to a report released by the SEC and CFTC in October 2010.
While swings in the Dow average yesterday didn't track the individual companies, their influence showed in the 116-year-old gauge. Its high for the day came four minutes before 12:30 p.m. and the second-lowest point subsequent to that was reached at 1:59 p.m.
"I don't think this is of the magnitude of the flash crash," Weber said. "What this shows is there's software in the market that was not calibrated or tested against a type of condition that appears to have emerged where liquidity-supplying algos were backing away just when the liquidity-demanding algos were appearing. That appears to have caused the fluctuations to be much more extreme."