September 8, 2011
RE: File Number S7-36-11 "RETROSPECTIVE REVIEW OF EXISTING REGULATIONS"
Ladies & Gentlemen:
As news reporters and not editorial writers we don't opine. But a recent story here in Barron's illustrates how the Commission could empirically study some of its regulations.
Your request for comment includes this question:
4. To what extent does relevant data exist that the Commission should consider in selecting and prioritizing rules for review and in reviewing rules, and how should the Commission assess such data in these processes? To what extent should these processes include reviewing financial economic literature or conducting empirical studies? How can our review processes obtain and consider data and analyses that address the benefits of our rules in preventing fraud or other harms to our financial markets and in otherwise protecting investors?
For our Aug. 13, 2011 story "Hitting the Switch on New Circuit Breakers," we commissioned a backtest of one of the proposals for preventing a repeat of the May 2010 Flash Crash through single stock "limit up-down" volatility controls (see below). The analysis entailed a bit of computer processing. But if a tabloid like us can get the job done, then surely it's possible for smart financial regulators to do such state-of-the-art empirical studies.
I'll bet the Yale researchers who helped us would be willing to help the Commission get up to speed.
Best of luck,
Bill Alpert
Sr. Editor
Barron's
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