Summary: GAO reviewed how major and emerging securities and futures markets operating in the international marketplace use or plan to use automation for such market functions as order routing, and execution, and information dissemination, and clearance and settlement, focusing on: (1) the extent of automation; (2) potential automation risk; (3) regulatory oversight of automation risk; and (4) global coordination.
GAO found that: (1) most major and emerging financial market have automated or plan to automate all or some of their market functions due to such considerations as efficiency, competition, and market expansion opportunities; (2) market officials say they are aware of automation risks and have taken steps to address such risk, but methods and degrees of addressing such risks vary widely; (3) oversight is limited and uneven and the roles of national regulators vary considerably; and (4) although several international organizations have projects underway that focus on selected aspects of automation, none are focusing on an overall approach to developing systematic, coordinated actions to address automation risks.
