PALM DESERT, Calif. — Shortly after the chief systemic risk officer of the Depository Trust and Clearing Corporation warned attendees at a securities operations conference Wednesday here that Greece's crisis was a systemic problem, the Dow plunged 1,000 points.

The panic-like drop was spurred by concerns about Europe's ability to bail out Greece — and accelerated by heavy doses of automated trading that caused many stocks to enter near-freefall conditions.

The wild swing had political statement written all over it, as Congress continues to move toward financial reform in the Senate and House.

Almost immediately, Sen. Ted Kaufman (D-Del.), a harsh critic of Wall Street over the past two years, released a statement saying the "growing sovereign debt and banking crisis in Europe is very troubling. The U.S. needs to get its financial house in order through strong Wall Street reforms that will serve as a lasting bulwark against financial instability.

"I also have been warning for months that our regulators need to better understand high frequency trading, which appears to have played a role today when the U.S. market dropped 481 points in six minutes and recovered 502 points just 10 minutes later. The potential for giant high-speed computers to generate false trades and create market chaos reared its head again Friday. The battle of the algorithms — not understood by nor even remotely transparent to the Securities and Exchange Commission — simply must be carefully reviewed and placed within a meaningful regulatory framework soon."

The national media reported that black boxes—automated trading machines—took over, producing heavy selling. USA Today’s headline screamed, “The Machines Took Over.”

The Wall Street Journal, citing multiple trading sources, said a major firm accidentally released an errant program, where a trader accidentally placed an order to sell $16 billion shares of Procter & Gamble, instead of $16 million, via e-minis, the futures contracts tied to equity indexes.

This kind of fat-finger mistake and algorithm-gone-amok environment is exactly what the financial industry has been trying to avoid — now to seemingly little avail.

The big plunge came at approximately 2 p.m. Eastern time, with the Dow's trough coming at roughly 2:30 p.m. The panel discussion on systemic risk at the Securities Industry and Financial Markets Association conference began at the equivalent of 1 p.m. and ended at 2 p.m. Eastern.

The Dow finished down 347.80 points, or 3.2%, at 10520.32.

In the midst of the steepest part of the plunge, another DTCC executive was telling his audience that the financial industry had done a dismal job of taking charge of the reform debate — and blocking reform that did not make good operating sense.

The industry needed to stop being the "tail" on the discussion and instead become the "dog," Robert M. Hegarty, a managing director at the DTCC said.

Industry analysts Larry Tabb of Tabb Group and Sang Lee of Aite Group said all the reforms being pushed are likely to require big investments by securities firms in technology and operational costs. Costs which will be passed on to customers, in trading fees, or take a chunk out of profits.

Tabb said the industry had "misplayed the whole issue from soup to nuts." And Hagerty said the "most efficient" answer was for the industry to get together and institute meaningful reforms on its own, in ways that conserve capital.

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