we need to figure out a handful of programs that are making a proven different and take those to scale. we are going to use all of our resources to do that. it is not about what feels better or what looks good on paper, but what is dramatically better in the students. >> those that are effected, let's give them a chance to shine. we can shine the spotlight. i think it is a good idea. we are trying to fundamentally change the business we are in. if you do in my current and -- to do a much better job, calling up the things that are not

effective. >> i am a professor of criminal justice in massachusetts. in massachusetts, we have great momentum with the new law. we are excited about it. in the public colleges, i think we are looking for college students getting into the high schools to do some of this work. i think we have this unique momentum right now, on the same car as drunk driving. that is the kind of momentum by want to see. i do not want to see expensive programs. i do not want to see $4,000 to go to different training. i would like to see colleges going into high schools. i do not know how i can do that. i would love for you to speak to that. >> i love the idea is generally of getting high school students

into high schools to be mentors and being tutors, ought to help during school days and after school. i think it opens up a new world of opportunity. i love the idea. so much of this -- we can help at the local level. find the principle that is a partner. start with 10 students. go to 20. go to 30. not every school welcomes this culture change. if one principal says no, not on 3 more doors. i promise you there is enough the visionary leadership. success builds upon success. the need to be persistent. i will take two more. >> one of my questions is for your blueprint. rather than just asking questions, and giving service

about the youth, is there any possible way we can create non- profit organizations that help and power the youth and let them know that we are the ones that aren't going to have to make these changes in schools? -- we are the ones that are going to have to make these changes in schools. >> it is a great question. [applause] >> the honest answer is that we as adults have not done a good job. use dialog will get us where we need to go. -- used dialogue is where we need to go. whether it is a peace-keeping team, additional nonprofits, i think the best ideas will come from the local level, and from teenagers themselves. i actively encourage you to step up, get your peers to step up, and challenge adults to do a much better job.

i think there is a tremendous untapped, unleashed power. it is not just yourself. sixth, seventh, and eight waiters, are smart about what is going on. -- eighth graders are smart about what is going on. >> my name -- i met the drug prevention center. this idea of scaling up is easier said than done. i was wondering what your relationship was teacher preparation. there is a problem with teacher burnout. a lot of teachers stopped teaching after three to five years but i wonder what the role of disruptive questions and bullying is there. >> that is a good question. if it is a huge concern.

a number of teachers, for the obvious reason -- they want to have an impact, and when they get in, they do not feel supported it did not have the management skills. without the support, we lose that. it is a major challenge. none of the stock has an easy answer. i have challenged education pretty hard. i have spoken to hundreds of great young teachers around the country. one of the biggest complaints is that they did not have enough practical experience as an undergrad. they had a lot of theory, and not enough actually working with 30 students in a class with different backgrounds. it is a challenge to get students into a variety of schools, a variety of customs, helping them with the confidence they need to be successful. it is usually important some schools of education are doing a phenomenal job.

others have a long way to go. we had a state university that was about 90 minutes from chicago. they actually had their students, and live in a hispanic community. it is absolute cultural immersion. not surprisingly, a lot of them come back thinking very differently. that is one of the areas -- that as a separate lecture. but as one of the areas we are challenging schools of education to do a much better job. having said that, once kids hit the classroom, we have to do a much better job. it is tough, tough work. we are asking more teachers -- more features now, than ever before. -- more of teachers now, than ever before. if we can keep that count the classroom, the dividends for our students are huge.

last one. >> than the executive director of pacer center in minnesota. thank you for your commitment today. i want to ask about parents. there are a lot of parents concerned about their child being bullied. what provisions might -- might there be -- we saw what ms. walker where her son committed suicide. how do we provide information about these issues, whether their child is being bullied, or whether they are the bully? >> i would take it in a much broader context. part of the challenge, and obviously it is related, but if we do not do a great job in engaging parents generally, and they are but missing ingredient generally. we're not done a great job

there. i'll tell you a couple of things we are trying to do. we're actually looking to double funding for parental engagement. money alone does not begin to solve this. frankly, is not enough money, but it is a 100% increase. we're making a huge investment. there are probably hundreds of parental and gauge the programs. many look good on paper. many are ineffective. the idea that it is easier said than done -- will push very hard to figure out which ones are helping, and making a difference. we want to do a much better job asking parents how they feel about school. we talk about serving students. we're going to survey parents. would you recommend the school to someone else? is your child safe? is there an adult they can talk to? this idea of doing a better job of talking -- of listening, and

being very transparent with that data every single year. this is what our parents are feeling. i'm absolutely convinced when those trends are going the right way, and academic results will get better. when they go south, or flat line, those schools will struggle academically. we want to get better. it is easier said than done. where like to put a huge amount of resources behind us. we often talk about parental engagement, and may be the primary, or middle schools we surveyed our teenage -- middle schools. we surveyed our teenagers in chicago. one of the biggest things they wanted was more activity with their parents. teen-agers are looking for adults. they want to connect. we try to do little things like family bowling night. a distance a chance, or even an excuse to get together.

engagement is not just for six, seven, and eight year-old. is for our teenagers. they are literally crying out for more contact with their parents did we need to find ways to facilitate that in a nontraditional way. >> thank you for having me. [applause] >> after education secretary duncan spoke, a panel of child the element researchers talk about the scope of boeing in public schools, and the scientific research available on how best to solve the problem. this is a little more than an h.

>> we are delighted you're here. some for questions came up with secretary duncan. we hope this panel can answer, or raise additional questions you might want to wrestle with route your workshops over the next day and a half. my name is valerie manholmes. i am a director paul -- director of the program at the national institute of child and human development. it is my pleasure to introduce my panelists for this morning. we will be talking about the scope of the problem. i am going to introduce my speakers -- our speakers. they'll give you a brief overview, and then we will have a facilitated discussion, and finally time for questions and

answers. my colleague, dr. greta massetti and i have had the pleasure of helping to shape the session, and look for to your questions, and engaging with you on this topic i would like to first introduced -- on this topic. i would first like to introduce dr. phillip rodkin. he is interested in promoting healthy peer relationships for children in educational settings. the goal of his work is to understand the development of aggressive behavior. also, to devise interventions that take account of children's existing social relationships. next, i would like to introduce sameer hinduju. he is from florida atlantic interviews -- university. is the co-director of the cyber-berlin research gentle. he works nationally and internationally to review of

mine and victimization and real- world consequences. he is a member of the advisory board for harvard university and the safety task board. he has given keynotes to a wide range of audiences. his most recent book is entitled "bullying beyond the schoolyard pickup finally, i would like to introduce dr. kathryn -- schoolyard." finally, i would like to introduce dr. catherine bradshaw. she is a joint appointment in the johns hopkins school of education. she is associate director the board for prevention and intervention. she is a busy woman. her research focuses on bullying in the school climate. she is also involved in the

development of aggressive and problem behaviors, and the design of school-based prevention programs. we also had a doctor who unfortunately is no and not able to be with us today. dr. catherine bradshaw graciously agreed to stand in for her and share part of her presentation. without further ado, i would like to bring forward dr. phillip rodkin. [applause] >> thank you very much. it is a privilege to be at this meeting. let's see. put the mike down -- put the microphone down. i cannot get -- all, i see. here we go. there we are. part of what is excited about this summit is that the history of bullying research is one of

tragedy and response of some terrible, awful event happening, and then, react applicable we try and do something about it. it is the tail wagging the dog. this has always been the case in research on a boeing. around 30 years ago, there was a situation in scandinavia where three boys committed suicide for many of the reasons that we are now well aware -- bullying, taunting, and so forth. in response, a professor that is still very active in scandinavia was commissioned by the government of norway to do a bullying intervention. what is interesting is that he had written a paper around three years before that said aggression is one of the most stable behaviors there are four

people, meaning if you are aggressive at one point in time, you'll probably be aggressive at a later point in time. it is very difficult to change. aggression in children is very, very hard to change. it is not an possible, but it is really tough. it is one of the most it appears there is. nonetheless, knowing that, he thought he could still change aggressive behavior in schools, or bullying. he thought that he could distinguish indiscriminate aggression from the kinds of abusive relationships we see occurring in our schools today so, with the mandate of the norwegian government, -- today. so, with a mandate of the norwegian government, he instituted a program in virtually every school in the country. it was very interested. it required a lot of a monitoring. it was a very intensive project. in the formulation of this

project, he came up with this definition, to which has always been referred to my secretary duncan on what distinguishes bullying from aggression. there we go. and unequal power dynamic, and intentional action, a chronic condition -- boeing happens repeatedly over time. -- bullying happens repeatedly over time. it is not reactive. it is intentional and meaningful. unequal power. what does that mean? it does not necessarily mean physical power. because, at times, especially with cyber-bullying, it did not need physical strength to bully. it means power. it means control. so, the paradox of aggressive behavior is that aggressive behavior is both completely

malcontent and dysfunctional, and it also serves a purpose. it demarcates territory. it's a way of changing someone else's behavior. in school, and outside of school, it is about gaining power, control, not just physical power, but social power. this is why bully's tend to be more popular than their victims. they have more social status than kids who are being victimized. when we think of bullying as opposed to oppression, bullying is a relationship. with a bully, there is a victim. it is an abusive relationship, a relationship of control, dominance, akin to domestic violence. aggression can be a problem of the individual. i might be aggressive for one year, and might have aggressive

thoughts 10 years later. bullying is a relationship between people. you look for elements that make that relationship by all, not moral, but that makes it work for the kid that is being a bully. that is where you need to look at the relationship, and who is supporting the relationship. who in the classroom, who in the school is saying that this is ok -- encouraging the relationships that are fundamentally immoral? do social networks at school or on cyberspace help make it adapted for the bully? we ask kids to name, not just are you bleed, or are you being harassed, but who is bullying whom? what is the relationship between the bully and the victim.

because it is such a sensitive topic, we do not just have kids who report on they feel is blame them, but in the entire classroom, at least in an elementary school context. for instance, this is the kind of measure we used in a research capacity. on the left, cookie monster. you always thought he was a nice guy. when you put together and aggregate the responses of all the children in the classroom or the school, you'll know who is bullying whom. in our work, we cannot tell the teachers, principals, who is building a home, because of confidentiality reasons. but, there is no reason why schools cannot do this, or a measure similar to this on their

own. it is bullying is a relationship, and it is supported by some of the kids in the school, then you need to talk to the kids, not just informally, but in a systematic way. asked the children who is going home in the school? you added up to get -- bullied home in this school? you add it up together, and you know. there is this issue of if this seems so obvious, how come the teachers did not see this? how come the principal did not see this? the answer is usually because they did not ask. they did not want to know. it is not so hard to figure out in some ways. 50, 60 years ago, as a part of an education curriculum, teachers were instructed, asked to do tests in their classroom

-- asked all the kids who do like least, would you like most, who was popular, was not popular, and use that information about the social contours' of the society in the classroom to make it work. teachers do not do that anymore. they are too concerned about standardized tests the. they have this dualism between academic learning and the morals that kids are burning in the classroom, but they should do it, and it really would not take that long. when we use this measure, we find something that is pretty interesting. elementary school kids, third, fourth, fifth grade -- there are a lot of boys that are bullying girls. almost half. we have found this in three separate studies. when we have a list of kids on the left or bullies, and a list of kids on the right, and we ask kids to line them up, we have

many boys that are bullied and girls. this also reflects some of the concerns that were mentioned previously about sexual harassment, and homophobic epithets. if you did not connect the lines, you do not see the relationship that is there, and that is so troubling. boeing is a relationship, a relationship of dominance, and control -- 8 b. it -- an abusive relationship. effective intervention does not just look at how the rejected child is rejected, dysfunction, or deficient, you look at why the boeing is working for that bully, and in that school. possibly the most important thing which you need to track children's relationships. -- in you need to attract children's relationships.

in the to do it in a formal way. it is a very easy task. as almost never done. when assault which it what does the social dynamic look like? -- what does the social dynamic look like? finally, of the testing will not overcome the moral issue of bullying that was put so well by the secretary, and in the opening video. when it comes down to it, schools need to be a place that is welcoming for all children. parents need to support that norm, even if some of them don't, and ultimately, all of us have to see, that whenever age, that you do not put yourself up by putting other people down. when that message gets across to kids and adults, and we launched that in the schools, problem boeing will diminish. -- problem bullying will

diminish. thank you. [applause] >> good morning. it is an honor to be here. and there's talk about cyber- bullying -- what we know and what we can do. we define that as willful and repeated harm through electronic devices. harm has to take place. maybe repetition is also in love. we know kids have embraced computers, the internet, and cell phone. we see cyber boeing perpetrated -- bullying perpetrated on the

chat functions. that is how we define it. approximately 15% to 35% of students have been victims. that percentage differs, based on whether you are including social my parking sites, -- social networking sites, and also if you're asking them about the last 30 days, or their lifetime. a number of nuances the fact that percentage. in our most recent data collection in denver, which was the spring of this year, we found that about 21% of youths have been victims. one out of every five that you know is being a jerk to somebody else on line in some capacity we are also seen in our

research, and it is being played out that girls are likely, if not more likely to be involved in cyber-bullying as boys. it kind of makes sense to us. as cyber-bullying is more verbal. it tends to peak in middle school. that is not without exception, but this also makes sense to us. we think about elementary schools being about aptitude testing. we think about high school where you are gaining more self confidence and getting involved the more extracurricular activities. for me, middle school was the worst. i was extremely concerned about what everybody else thought about me. for sure, it devastated me when individuals were spreading rumors, or making fun of me. kids tend to internalize the

harm that comes from bullying at that age. finally, most victims know, or think they know who the bully is. maybe what we think about the internet we initially think about stranger danger, but that does not the case when you are considering cyber-bullying. it tends to be known peers. what does the research showed? what we are able to identify it is that there are definite physical consequences. research has pointed out headaches, and even a domino pains -- physiological consequences from kids having to deal with the stress and strain that results from that. we're also seeing the emotional consequences, such as anger, frustration, sadness, and fear. maybe you are thinking that we all need to deal with negative emotions, but the story is that

youth have not developed the positive coping fields that we, as adults have. will not to psychological consequences, we identified a link between cyber-bullying and self-esteem. those with been victimized, to levels lower self-esteem. we try to figure out which came first. we have identified a link between suicide and cyber- bullying. that not only completed, but also engage in a. you also think about social competence -- the ability to succeed in social interactions. many of us have gotten to where we are because we have developed that over time. that is compromised with cyber-

bullying. finally, there is a behavioral consequences. those that have been victimized in cyberspace tend to be the demise in the world what -- real world. -- to be victimized in the real-world. alcohol use, and overall difficulties have been tied to this as well. work to be done -- i love the fact that the department of education is used on formal assessments, rigorous research, rea identified the scope of the problem -- really identifying the scope of the problem. we've created a structure to make this happen. the department of education has also encouraged online methodologies. information-sharing, workshops, i think that helps spread of course there is a lame way to get in front of kids, and preach or lecture to them, but there is also a very relevant,

means the way to get this message across about acceptable to relationships, and how to keep yourself safe. i know we will focus in on climate for a good portion of the next couple of days. do kids think that teachers are invested in their success? pierre-mentoring -- we talked about getting older used in front of yogurt used. then come immobilizing them. they be doing an audio message. having an -- having a pledge campaign. i think it is important to focus in on special populations. we're seeing that those who indicate they are not heterosexual are targeted more so for cyber-bullying and traditional boeing. i'm also interesting with the

aid -- interested in the cotton some disorders bid to grab the plight online -- gravitate of mind. they did not want to pick up on the queues a uni are familiar with. -- on the queues that you and i are familiar with. electronic dating violence -- i have statistics on that. finally, this is not something we can replicate to cyberspace. this is about kids and their problem be years in the world world. afford to check in with him, figuring out an action plan -- i look forward to chatting with you, and figuring out an action plan. [applause]

>> is quite an honor to be here today. i am also pleased to represent the professor that could not be here. research on factors increasing the risk for involvement in bullying often draw on social, economic framework. this framework has been applied to bullying, highlighting the importance of context in relation to individual factors. that context includes social and physical aspects of the environment, which influence the impact and those involved. not surprisingly, there is an increase in interest in the link between belize and school clemens appeared several studies indicate that -- the link

between belize and school climates. the more for canadair involve bullying in, less if they feel. bystanders are also negatively if i did. researchers have identified social factors that contribute to what they call a climate for culture bullying of. this includes shared beliefs and attitudes at support bullying. in the context, aggression and pure victimization become the norm. disorderly, or disorganized schools have classrooms with higher rates of bullying and aggressive behavior. the risk for retaliation is great in this context. when it comes to addressing conflict, there are also different views. if it makes it clear -- and mix it difficult to get a clear picture. a recent maryland study found that staff members grossly

underestimates the prevalence of bullying, although it were concerned about its impact. furthermore, students thought that staff was unaware of bullying and that they did not intervene effectively. when we ask staff, 97% said they had effective strategies, and rarely made things worse. this highlights the discordance between perceptions. compared to the relationship, there's very little work on parents' role. the generally underestimate the physical harm they tend to be mostly concerned on the high school level, and share concerns at the high-school level. prevention researchers emphasize the importance of supporting parents of the victimized children, and encouraging them to actually speak to their kids.

when our studies indicated that about 5% of their parents did nothing when the child reported bullying to them. we want to get parents to be able to support their children and help them cope. we also need to be careful not to model aggressive responses or encouraged the territory behavior. since it is often a parent can't tell initial reaction -- a parents initial reaction. some parents were even coaching their children to fight back. we have an influential leaders in this field about research and how those attitudes are formed in the home. i think that is an important target as we think about future education efforts. we can't mixed messages about retaliation which can be confusing. they're important developmental

differences in how students respond to bullying. no. children are more likely to contact their teachers and parents, whereas team's turn to their peers or tried handle it themselves. that usually means an aggressive type of back. -- of act. pirouettes are particularly relevant for prevention efforts. a common approach is the tiered public health model. one report includes the universal system of activities that affect all students within a defined community or study. that is in the greens on of the triangle. later onset of selected interventions that targeted that subset pretty --. some popular models include

positive the intervention and support. these types of preventive interventions and efforts can be implemented and multiple levels within a child's ecology, including intervention in counseling, individual students at the classroom level. research highlights the importance of emotional skills and effective communication and coping power. emotional learning problems highlight the significant problems of these programs are on academic as well as behavior while comes. effective classroom management is a critical piece of this equation. there's a growing body of research documenting the importance of school support, a common set of expectations, and

involves all school staff in prevention activities. effective supervision and clear anti-bullying policies needed. families play a critical role by promoting a context that promotes child disclosure and coping skills. at the community awareness campaign, it can be particularly instructive. it provides all logic for connecting bullying prevention with other programs to prevent behavioral and academic problems. they also seem like doing more programs is better, but that may not be the case. research indicates that on average, children are doing about 14 pilot prevention rather programs. this can often be overwhelming for staff, thereby leaving the port implementation.

we encourage groups to connect our prevention efforts into a seamless system of support which coordinates with high fidelity and implements across all school context. we recommend developing a comprehensive and long-term prevention plan which addresses multiple student concerns through a set of integrated programs and services. i'll close with this triangle that helps illustrate the was the week and start thinking about integrating the system has its support across the public health continue on. that way we can implement programs that foster multiple competencies and skills in order to prevent a range of problems, including bullying, and respond appropriately when bullying occurs.

now will put on my different hat. i've been influenced by a lot her work. she was unable to travel. these are notes that i am working from in terms of today's presentation. the emphasis here is on the role of policy. the state of georgia was the first in the u.s. to cut requirements for a school requirements to address student bullying in public schools. that law passed in 1999, the same year as the shooting at columbine high school. currently 43 states have laws addressing bullying and school. this helps to find bullying. some of them provide no definition at all. it typically require states or local officials to develop and enforce policies against bullying, but there is considerable variability in what must be addressed in these policies. for example, most require or recommend procedures for reporting bullying incidents, most require recommend policies for investigation of incidents, that includes parental notification.

most policies also highlight the discipline for students and training for school staff, in quiet you require state departments of education to develop the proposed model policy that can be emulated on a local level. sadly, relatively few of the state's encourage implementation of evidence-based prevention programs. there's a series of best practices which are based on existing bullying prevention programs in the available concerts -- reserves. one set of recommendations for focuses on what is referred to as misdirection. it's a common approach is used by schools but actually may do more harm than good and are important to take note of. for example, some policies typically mandate suspension forced students who bullied. they have the potential to impact a large number of

students, given that we know how many students are involved and bullying. they often deter or discourage students or staff from reporting. bullies have problems, too. by sending them home without any type of intervention, they continued down a trajectory for further delinquency. children who bullies are in need of support services to stop their behavior. there're other commonly used strategy to prevent bullying that may do more harm than good. conflict since the there's a disagreement to be resolved between two or more individuals. bullying should be stopped right and treated as a disagreement. group treatment for children who bully may actually make them worse. some research highlights the importance and the potential

role for obedience training and poorly supervised group intervention for aggressiveness. a contagion process occurs, whereby the bullies reinforce each other's behavior. simple shortsighted solutions are not enough to change the culture of bullying. changing cultural norms is a time intensive activity. it would require a long-term commitment to the change process. one-day seminars cannot produce these changes. there are a set of 10 principles for best practices. the first one builds on the ecological framework by focusing on the social environment of the school. the sakhalin emphasize the role of data, collecting affirmation as we heard about this morning from the students who understand were some of the hot spots and activities are

happening. parents as well as staff can get a full perspective on this is question. this data can be helpful in getting support for bullying prevention, helps them on the problem. another recommendation focuses on integrating our connecting programs having a staff responsible for overseeing that. it can include students at a high school level and certainly parents, a diverse set of teachers and administrators. training is critical, especially about how to reinforce rules. how to increase supervision in those hot spots. they can receive training about intervening consistently and be rewarded and reinforced when they do entering. challenges for moscow programs include class time to wesley do some of the stop.

and that is always a challenge. and the bullying ledger, spending about 20 or 30 minutes on a weekly basis reviewing some of these issues is a very important piece. when you look at a curriculum activity, it might be two or three times a week that you spend that time. over time, we encourage administrators to make a five- year commitment to implementing the program. they can have a new program that turns over every year, but having the leadership and ability that they will give a program and try for a number of years and a brief period of time an action plan, it is in very important. change will not occur overnight. with regard to bullying prevention programs, or specific strategies the fiscal might be using, a series of studies of the past years examining the extent to which particular models have an impact on bullying, and unfortunately the pontiff from the studies have been mixed.

some studies suggest that certain models are affected, and other analyses concluding that they are very limited. once the study examined the impact of 14 and attacked as bullying programs and concluded that programs produce "a reasonable rate of return on investment." that is not good enough. we need to have a much stronger commitment to producing sound research in this area. another more comprehensive and rigorous study was conducted more recently and reviewed over 30 programs and 59 studies, and they concluded that the hold- school programs can be effective but they vary by the activities as well as implementation. it concluded that the programs work best.

any determine their effectiveness. different populations and particularly in urban settings with minority youth were models have rarely been tested. research is needed to determine which components are critical for sacked -- for success. thank you. [applause] >> ok. i'm from the division of balance prevention at the centers of disease control and prevention. we're quite a move to audience questions, but i will start off by asking all our palace to give us quickly your perception of what is the next up for research and bullying prevention? if you had at your disposal research funding, what would you invested in? you might need to turn that on.

>> the next that is to talk to kids about bullying and who is bullying in their classrooms and in their school. that is the next up. develop technologies that are already existing to enable that information's to be understood in a simple way by teachers and school psychologist. if you talk about bullying in a school-based setting. the next epoch ask about what is going on in their schools. i was it a second step from a research program, catherine alluded to this at the end of her presentations, is to see if there are really bullying prevention programs that are affected. as it tore the indicated in her question the secretary duncan, less than meets the eye sometimes in terms of programs that work.

that does not mean that there are not programs that are not working. what it means is that we do not know about them. we really have not formalize them in a way that we can understand if they work and why they work. i think with bullying prevention, as in any other field of endeavor, people want to say that their products are effective. there is a great hope among all of us that they are affected. you have to look at that more carefully. number one, taught the kids. number two, find out what works. >> i'll like to echo what phil said. >> i think that there are a number of programs that have been developed. some have been very thoroughly developed and we do not have the

resources currently to test them. and test them in the way that they need to be tested, with large enough sample sizes. most of these are whole-school interventions, such unique have trials of 40 or 50 or more schools to be of the detected -- to be able to detect significant effects. one person is not only relying on student reports, because they may not be sensitive to the changes that we're seeing, but also observation data collection,. nominations -- peer nominations, and so on more comprehensive assessment system to test and a sensitive way the changes that might be occurring. >> if there is a third thing, not necessarily in the order priority, but secretary duncan mentioned this. it's teacher's classroom

management ability. people are running extracurricular activities, coaches, school psychologist -- anyone involved with kids. but let's just say teachers as a way to simplify. we on note that some teachers, teaching a class even apart from the content matter is about establishing a dynamic and social atmosphere and not letting that get out of control. when you have teachers, second grade teachers to break down into tears in their classrooms become a cause kids are shouting at them, that is not a teacher who can manage your classroom. a classroom is a society, a small tiny society of 20 or 30 kids. how do you manage this diverse group of children? when the kids are not just 20

kids sitting in a row or tasks, but they are connected, or networked, whoever relationships, positive relationships,-relationships, and different characteristics. does the teacher know that war is the teacher focused on x, y, and see? ist we're working on now watching teachers in the classroom and outside the classroom and seeing which teachers are doing what that helps promote a positive social atmosphere in the class from the get go, so they do not lose control, so kids are with the teacher, and you have an orderly class environment. focusing on the adults in the schools would be a third very important step. >> are there questions from the audience?

[inaudible] >> i am the author of a girl called "of rollout," talking about psychological aggression among girls. i am the assembly speaker the goes into schools and do a lot of public work on this issue. i found it remarkable that one of your slides indicated that girls were bullying boys 8% of the time and bullying girls 13% of the time, where she found double-digit rates for boys bullying girls. how are you defining bullying? and the reason i wrote my book is because the definition of bullying work excluding psychological aggression, in particular relational aggression. how are you defining it? and do you think that the bullying is looking at the range of aggressive, particularly those most likely to fly and amid the radio -- plight underneath the radar or a

margin you make an excellent point about bullying among girls. in our world, the kids -- my work is primarily elementary school kids. they ignore that. figuring out -- a figure out what bullying means on themselves. when you ask the kids he was bullying whom, they tend to pick out the boys. [inaudible] >> it is partly our responsibility to make sure the kids understand that, because girls grow up believe that this is just girls being girls. they do not learn to define this as aggression. and i'm sorry to interrupt. but if you ask them to save what bullying means, but will reflect back what the culture is

telling them what bullying is. the research should not be repeating some of the negative messages about bullying coming from the culture. >> i'll agree with the substance of your point. the measure that we had and what can -- and what kids tend to report is not sensitive to that type of bullying among girls that you have been focusing on. i completely agree with you on that. i agree with you less on asking the question where we reinforce these sex roles for bullying. what we're asking is according to the children, who seems to be a bully? and when we ask that question -- a simplified version of it -- we have four pages. page number one, who are boys that bully other boys? there's a column of boys on the

left and a column of was on the right. and then we do boy/girl, girl/boy, and grow/core. >> hill is convincing other people not to be a friend? who is giving the silent treatment? by point is that kids to find bullying and up. merrill way. -- mike point is that kids definable lane and a very narrow way. it is not a opt-in to their range of how kids hurt each other. they're all kinds of cyber cruelties that occur that kids do not understand is cyber bullying because there's a lack of awareness and a connection to what that word means. >> i agree. >> that behavior needs to become a part of the research. i do not agree that 8% of girls bully boys. i think those numbers are bigger and i want to make sure that those questions are being

asked. i appreciate your candor. >> we talk about relational aggression, and i asked about what types of behavior that they're doing. we can talk about the definitional issue that we adopted from norway, we adopted the program, so many of us look at social aggression and we're really focused on the dynamics across gender. i would also point out that there is a recent analysis at the university of arizona that showed very clearly that boys and girls do not differ across the national or relational and social aggression. this is not a pearl phenomenon. the process is different, and the outcomes are more severe for pearls. we need to focus on their very aggressive corporate hour in

chicago public schools. the girls are scarier than the boys. you cannot think that these girls are just spreading rumors and excluding each other from a weekend party. in fact, growth riding is real. -- girl fighting israel. it is our middle class white girl phenomenon. it plays out differently in african-american. we need to consider coltrane context as well. the culture and context as well. >> the american institute for research. i think what the framework -- the question on tw of things. -- don two thanks. -- on two things. they talk about the fact that there appears to.

-- there appears to be a sealing all bullying impact in terms of the current literature, including this. it is typically the authors of the educational research the started to suggest, and i am one of them but i am not the only one, if you really want to have an impact, if you have to think about how we connect bullying intervention with other things that people are talking about. it is not one or the other. it probably is a combination of learning integrated with what you have been working with and how those things would connect with and fight bullying endeavors. i want to add one more thing. that is a big question. >> i thought that was a great answer to your question.

>> you are a smart lady and a smart researcher. i have not heard people talk about things other than academics. we have issues of racism and homophobia and things like that which really impact of kids behave. we also have not just a teacher in capacity, and i think we have models for how to help teachers become more effective, but there is much more work that is necessary. but i am intrigued by the fact that while i am a great fan of teachers in the u.s., people do not talk about the fact that sometimes teachers -- internationally, i have a survey and questions i have is students who feel bullied -- what i get from students is how come you do

not ask whether teachers also say bullying? how can we think about what we are doing more comprehensively, particularly at a time when in the blueprints the department of education is talking about focusing on the entire school clement and there is this interagency effort that really connects to the institute on medicines work about the fact that there are common risk factors that cut across everything. that is your last graphic. >> i think it is important to recognize that you can prevent bleeding which the program that does not have bullying in the title. we will hear later on today about the social emotional learning and collective that has been used in pre-k through grade

5. we are in the process of bringing that to a middle school level, where there is a void of evidence-based programs across multiple dimensions. i think we can turn to some other models that have been more effective at preventing violence or promoting academic achievement because they are targeting some of those similar types of risk factors. we had a conversation in the elevator last night about -- are we going to get into where does bullying and an artist aggression began? we are here with a focus on bullying, but these things are involved in other things. they are abusing substances. they might be at risk for gang involvement. we have to recognize that while we have a relatively specific focus today on believing that there are a range of other programs we can look at. some have been looked at. i also think we are not collecting the right data. maybe we are relying too heavily on self reports and not getting

into the other methodologies that would be sensitive. >> i do have one piece there. the focus on the multi-component program is, i

there are promising programs are on violence prevention. here is a transition program. that has a strong family component that is shown to be effective at reducing violence and aggression. i do not know if it is like the data on bullying. we are also working closely with a program called coping fox -- coping power that follows social information processing and focuses on changing norms about violence and getting kids to regulate the motion. that would be the tip of the triangle. that includes a family peace. all of these are good.

if we cannot get people to show up for them -- we have to do research around implementation. what is attractive to families? why do they want to come to the sessions? what is in it for them, and why did a benefit? >> we are running short. i am going to try to fit in as many questions as possible. >> i am from penn state university. i am a member of club ophelia. i'm want to comment on something you said about a definition of bullying. i speak all over the country. i listened to students, parents, teachers, and administrators. one of the things i hear is there was not a common definition of bullying. teachers really feel stymied. they will discipline students in the classroom and will go to their administrators.

administrators will say, "i do not consider that to the bullying." a child will tell their parents something happened at school and the parent will call the school and say, "that is not believe in. we do not discipline for that." i have had children asked, "what is bullying to you," and teachers and administrators. their responses are vastly different. i have heard we are going to have a unified definition of bullying. i think that is the biggest task. until we are talking about the same kind of behavior, everybody is going to work from a different definition and talk about different things. that is why i see teachers burning out. they are working on one kind of behavior and none of their peers support them.

they feel totally lost in the system. catherine, i know you mentioned that as well. >> i think this is a heated, ongoing debate within the field. researchers disagree. i swear on one reviews all my papers because i get them back with the same kind of comments. he calls it the achilles heel of bullying research -- the lack of a consistent definition. you get different findings if you give a definition or you do not, or you break out individual behaviors. perhaps that is another issue that could be explored in some of the small group discussions about the potential utility of coming up with a consistent definition that the department of education puts forward, and helps researchers monitor in their own studies so they can draw some comparisons. >> i would add that for me i

would say that if a kid feels that he or she has no home at school, it is unsafe at school, feels that school is a hostile environment, that to me is enough for action. every kid needs to feel at home and safe in school. when they do not, as the secretary said, everything goes to pieces. in that sense, i would take the child's word as to whether school is a hostile environment. >> i am david. i am a member of youth representation today. i wanted to say that i appreciate your emphasis on the students. i think that is the way to go. in a lot of the research that is done in this issue, the bullying prevention programs we hear about on a regular basis --

people focus on the ones people have put money into and a lot of resources. a lot forget about the ones that are student-led. students come up with a lot of programs and do a lot of hard work. they are not called intervention programs, but they are. a student would say, "we are having this program today." everybody would grown at having to sit in the auditorium. students would go in the classrooms. they will talk to their students. students will listen to students. in your research, are you looking at the student-led programs, and are you going to support them? thank you. [applause] >> i will say real quick that i agree with you. these programs are coming up more and more often. they need to be formally

evaluated. generally, they are being encouraged. we have not focused on clear evaluations yet, but we will. that is why we are here. >> one more question. >> good morning. i served as the executive director for the national association of school resource officers. i do not want to say i will blame dr. brad shaw -- dr. bradshaw, but thank you for bringing it to the forefront. i present this as a question to the panel along with looking at it from our research point of view. as best i can discover, we have not lost a child to a fire in this country for over 50 years. somebody can correct me. i asked why. the answer is redundant layers of protection.

you have fire extinguishers. you have sprinkler systems. you have evacuation drills, etc.. is there a model there? if we have been successful against a key threat, it is an easier situation to deal with, because it is tangible. but we have sustained that for 50 years. is there a message there? the second question i have representing a group of law- enforcement officers that are boots on the ground people, i know i speak for them. i think i speak after several years as a school administrator. we have to get a handle on how to approach, from a research point of view, what we can deliver in the schools because of finite resources. the fire example -- it is estimated a third of the cost of the building. i am not bad mouthing fire protection. i am telling you what works.

in terms of bullion -- bullying, we've got d.a.r.e. we have to figure out how to do that. i believe a child who is being delayed or who is a bullier may be prone to join a gang, may be prone to be in drug culture, etc.. i really believe that is where it is at. >> i like the model. i think it is inventive. i think we should look to it and try to figure out -- maybe we could implement redundancies when it comes to protecting kids. it is not just the classroom level. it is getting the stakeholders' involved -- educators, community

members. i think that will provide the redundancy we are looking for. >> you bring up an important point for how we can involve education support personnel who are not teaching staff. we have been working with the national education association to understand what support and resources non-teaching staff including other professionals could support. i think they could play a constructive role. research indicates that are not getting the training they need around policies. they do not believe intervention is necessarily their role. i think we need to do some additional support and training around that. they were less likely than teachers to say they thought bullying was a priority for their job. we need to think of how we can evolve that. you bring up d.a.r.e. we need to continue rigorous

research studies. it has been shown to be an ineffective program. we need to make sure we are capitalizing on that active group of resource officers or police officers who are willing to be engaged in prevention opportunities and give them other ways to get involved. d.a.r.e. is unfortunately one of the programs we do know now -- there are more trials going on now -- that actually increases problems among youth. it is so widely used it is a network we could tap into to provide other evidence-based program. i know some researchers were looking for these to be delivered by police officers. thank you for commenting about those other people we often overlook when we are talking about bullying prevention. >> i have to jump in here because somebody is going to get

the hook up soon. there have been a lot of ideas i think will be carried on to the breakout discussions. i am sure there is gone to be i lot of good discussions about research directions and the future of believe in prevention. the breakout sessions are going to happen right now. the room will be on the sticker that is on the back of your name tag. if you have not received a sticker, please go to the registration desk. you can get a sticker there. i would also like to remind the press that all breakout sessions are closed and private. >> tomorrow on "washington journal," mark murray of nbc news talks about the upcoming elections. a member of the immigration lawyers association on the process people go to to become u.s. citizens.

after that, a "wall street journal "writer on her newspaper's investigation into how on-line companies use technology for the purpose of using about -- of learning about subscriber interest. live sunday at 7:00 a.m. eastern on c-span. >> earlier today, president obama spoke from the beach in florida. he was there to talk with area residents and small business owners about the gulf coast recovery following the oil spill. he is joined by a navy secretary who is spearheading a gulf coast restoration plan. this is 15 minutes. >> good afternoon, everybody. it is a privilege to be here on panama city beach with the men and women of united states coast guard. i wanted to come here

personally and express my gratitude to you for the effort you have waged in response to the oil spill. i know michele wants to do the same. we are looking forward to have the chance to shake hands with you and thank you personally for the great work you have been doing. machel met with folks in mississippi and had the chance to christen a new culture. the coast guard was the first on the scene, immediately launching a search and rescue operation. you were the first to recognize that we were potentially looking at a massive spill, even before the rig collapsed when the oil began to leak from the sea floor. a day and a half later, at a meeting with kent allen and others, i instructed the

department of homeland security and other agencies to make this response their number one priority. that is exactly what all of you have done. through the leadership of admiral allen, the coast guard, along with other federal agencies and state and local governments, has directed the largest response to an environmental disaster in american history. the response included more than 7000 vessels and more than 47,000 people on the ground. i know that to cutters, the aspin and the juniper, are here in court this week after performing other recovery act. many folks here have toiled day and night, spending weeks and even months away from their families to stop the leak, to remove the oil and protect waters of the coastline. i want to thank all those who

continue to participate in this effort. i also want to make mention and think dr. stephen chu and our team of scientists assembled from across federal agencies around the country and all over the world who have been working nonstop to kill the well once and for all. this is not only been the biggest oil spill in our history. it has also been the most technologically complex. it pushed the boundaries of our scientific know-how as engineers wrestled with a massive and unpredictable week. we faced setbacks and complications, all in pitch black waters nearly a mile beneath the surface of the gulf. today, the well is capped. oil is no longer flowing into the gulf. it has not been flowing for a month. i am here to tell you that our

job is not finished and we are not going anywhere until it is. that is a message i wanted to come here and delivered directly to people along the gulf coast. it is the men and women of this region who have felt burdened with this disaster. they have watched with anger and dismay as their livelihoods and their way of life for threatened these past few months. that is why i have made a commitment in my visit here that i was going to stand with you not just until the well was closed, not just until the oil was cleaned up, but until you have fully recovered from the damage that has been done. that is the commitment that my administration is going to keep. that also is why my secretary of the navy is here, a former governor of mississippi, a son of the gulf. he has been travelling across

this region, gathering information and data to make sure we are following through on our commitments for rebuilding. i reiterated this just now when i met with a few small business owners from the panama city area, along with governor charlie crist and not only the mayors of this region but also some of the business owners who are affected, folks like jerry jarvis, a charter boat captain. he started fishing as a deckhand in 1978. he has been casting for the past three decades, making his living on the water. he has lost fully half of his business because of the spill. he has been able to use his boat as a vessel of opportunity to make some money in the past few months. he is extraordinarily knowledgeable about these waters, being both a charter

fisherman and a commercial fisherman. he has terrific suggestions about how we're working with scientists at noah -- noaa to make sure we are monitoring, maintaining, and improving the fishing off the coast of florida and across the gulf. i also had a chance to speak to leanne leonard, general manager of by the sea resorts. she has had a decline in tourism. july was tough. she is now hoping that august, september, and october could help them rebound from what has been significant losses. i met with a man who has to commercial fishing boats. i appreciated the chance to sit down with them to hear firsthand what they have been going

through and to make clear we will keep standing by them. part of the concern carolyn expressed was the issue of seaford, testing and making sure it is safe. we are all over that, monitoring that carefully each and every day. hopefully we will continue to deliver good news as the days go by. i mentioned to her that we already had some seafood in the white house when the norland saves came up. we had a couple of paul boys po -- po boys. we are feeling pretty safe. the mayors had terrific suggestions about how we might help diversify the economy down here so they are in a better position if we ever had a crisis again, but more importantly to provide more jobs and opportunities in this

extraordinary and beautiful region. and want to go over a couple of the steps that we are going to be focused on over the next several weeks. first and foremost, we are going to continue to monitor any oil that reaches the surface and clean up any oil that hits the shore. as i mentioned, gary has been offering up his ship as a vessel of opportunity. he confirms what you have been seeing in the news reports. there are not a lot of patches visible right now, but we have to constantly anticipate that at any time you might see a patch of oil that starts coming in. we have to be able to capture that before it hits these beautiful beaches. as a result of the massive cleanup operation that has already taken place, the report by our top scientists found that the majority of oil has either evaporated or dispersed, or it

has been burned, scammed, or recovered. the dispersed oil is in the process of degrading. i will not be satisfied until the environment has been restored, no matter how long that takes. i want to point out that as a result of cleanup efforts, beaches along the gulf coast are clean. they are safe and they are open for business. that is one of the reasons michelle, sasha, and i are here. governors, mayors, and others invited us down to enjoy the beach and the water, to let our fellow americans know they should come down here. it is spectacular. not just to support the region. come down here because it is a beautiful place to visit. we are going to continue testing fisheries and will reopen areas as tests show the waters are safe. more than 26,000 square miles will open at the end of july and another 5000 reopened earlier

this week. this is taking time and has been incredibly hard on people who earn their living on the water. folks have had to have different areas to fish that are further away and require more fuel. maybe you make the decision not to send out your boat this time out. but their livelihoods, not to mention help of the people across this country, depends on making sure folks trust the seafood coming from the gulf -- trust it is as safe as it always has been. we have already been enjoying gulf seeker. we are going to keep monitoring this to make sure that areybody's favorite recipes going to be just fine. the third thing we are focused on its claims. when i came to the gulf previously i heard frustration about the weight bp was handling claims. in june, i met with bp

executives and they agreed to put aside $20 billion in a special fund to -- to pay damages. it is being run by an independent overseer the people can trust will give their fair share. we need to make sure claims are processed quickly, because many who lost their only source of income do not have a lot of leeway. they do not have the money to wait to be compensated. the folks we just met with have all got outstanding claims. i want to be clear about this. any delay by bp or those managing the fund are unacceptable. i will keep pushing to get these claims expedited. finally, i have charged, as i mentioned earlier, people to develop a long-term golf course restoration plan as soon as possible. that needs to come from the people in the gulf. we have been meeting with folks across the region to develop

this plan of action. that is how we can ensure we do everything in our power to reverse the economic damage caused by the spill. with the closure of the well, we mark an important milestone. but this is not the end of the journey. in completing the work ahead, i will remind us of what i heard in louisiana in june. i spent time meeting with fishermen and small business owners. the town mayor told me what his friends and neighbors were going through. he talked about how hard things have been. he also explained the way folks rallied to support one another. he said the people in the community might not have a lot of money, but that did not matter. "we help each other. that is what we do." that is what the coast guard has been doing for folks in need. that is what we do with america.

it is my job to make sure we live up to those responsibilities and keep up our efforts until the internment is clean, polluters are held accountable, businesses and communities are made whole, and the people of the gulf coast are back on their feet. men and women of the coast guard, thank you again for your extraordinary service. people in the gulf, we are going to be standing by your side. americans all across the country -- come down and visit. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> i am definitely going to go swimming, but we are not quick to let the press,, because you're not going to get a picture of me with my shirt off.

>> as i said, we are going to do everything we can to make sure full compensation is paid by the peak in accordance with the law. we are positive we are going to get it done. how are you? going to go for a swim? how is the water today? i am not going to let you guys take a picture of me, but it will be a good time. >> that is good. [laughter]

>> another chance to see the president's comments on the gulf of mexico recovery efforts tonight. we will reappear them beginning at 8:00 p.m. eastern on c-span. >> there you are, senator. daniel webster used to use it. >> daniel webster sat here? >> harry truman in 1939 -- when he saw this, he hated it. he really despise it. harry truman was seen as the senator from the prendergast machine in kansas city. i wonder if he did not think that the movie was looking at him and his relationship to the political machine back home. >> a senate historian on washington movies and his new book, "the u.s. congress -- a very short introduction." sunday night on "q&a."

on may 6, the u.s. stock market suffered a midday drop of more than 1000 points in less than 30 minutes before trading was halted. a joint advisory committee has been looking into what caused the steep drop and what might prevent such a fall in the future. earlier this week, the committee heard from financial industry executives during this two-hour event. >> welcome and good morning. i call to order this fall meeting of the joint advisory committee on emerging regulatory red -- regulatory issues. it is august 11, 2010. this meeting is in accordance with the government and sunshine act. we are joined by all the members of the committee except for [unintelligible] and susan phillips, who may be joining by phone. as we have done at prior

meetings of the committee, micro-share and i will share the duty. -- my co-chair and i will share the duty. >> i want to join the senator in welcoming our committee. thank you for the time and effort you have invested over the months to continue our review of the may 6 event. as part of the fcc/sec review, we have been reviewing transaction and order data -- snapshots, trade summaries, information about broken trades, and information related to lrps. the second area of inquiries focused on extensive interviews of market participants, there firsthand account of what happened on may 6 and the response to the art of dance over the course of the day.

we will share that report with the public next month. we sought input from institutions and individuals who can help build an understanding of what happened, how it affected the market participants, and how we might avoid future events of this type. at our last meeting, representatives of various exchanges discuss their experiences and observations of the markets that day. significant participants also shared their views and observations regarding liquidity trading and breakdown of an orderly market. today, the committee will hear the impact of may 6 from the perspective of investors large and small. we think the investor perspective is crucial for understanding this offense.

rules approved on july 10 require a halt in trading of stocks from the experience a 10% change in price over a five minute period. this gives the markets the opportunity to attract new trading interest, establish a reasonable market price, and resume trading in a fair and orderly fashion. in june, we published the comment that we should expand this program to include more stock as well as the specified exchange-traded funds. we are currently reviewing the comments on those proposals and hope we will have a new phase on the circuit breakers soon. we are amending rules for

breaking clearly erroneous trades. after may 6, exchanges exercise their existing authority to break clearly erroneous trades that were affected that day at prices 60% or more away from the pre-decline prices. the process used to draw that line was neither clear or transparent to market participants. we received reports of lots of clear guidelines for dealing with clearly erroneous transactions, and the lack of transparency around the decision to break certain trades but not others creates uncertainty for investigators and others about how these would be handled in the future. the proposed rule changes are designed to address these concerns by setting standards for breaking trades and curtailing the exchanges. these proposed rules are published for comments. we are reviewing those. we are considering whether other steps are appropriate to prevent

disruptions and other erroneous trades, including providing market makers. we are studying trading protocols at individual exchanges, including price callers and other rules. we are looking at other mechanisms that may contribute to a more stable market, such as instituting limiting mechanisms. as we continue to examine these and other issues and consider actions that may further protect investors, it is critical for us to continue to hear a variety of informed views. today's guests -- our committee members will not only shed more light, but provide knowledgeable perspectives. i want to thank all of our guests for speaking and our committee members for being here today. >> thank you.

we will consider our examination of the market event that took place on may 6. i want to thank you for co- chairing this meeting. we will continue to work together on these issues. we also look at the dodd-frank bill. our sets of commissioners, who will introduce in a moment -- we are going to be working together very closely. this brings the market under comprehensive regulation. i look forward to it. our meetings in the last month have been remarkable. you have more work than we do because we have a lot of

investor protection issues. some of these have come up five or six times. they exchanged e-mails and it has been cooperative. we do not always agree, but i think we agree on most. i want to thank you for that off script. the agencies are also working together on this issue around may 6. the expert panelists are born to hear from today are critical. i want to thank the staff for all of their hard work in planning this meeting and everything they are doing around may 6. i want to thank my fellow commissioners who were able to attend today. i know scott was unable to attend. i want to thank all of you as well?

this requires continued review. the staffs of the joint agencies put out a report may 18, which was only 12 days after. i guess with the rule writing we will have to do some deadline similar. today's meeting will be part of that ongoing process, building upon the staff reports. i think we are shooting for september, maybe even early september, and that the staff will deliver the follow-up report based on the research of the last three months. but then we really look forward to this committee to come back. we are hopefully going to set short deadlines for that comity 00 -- for that, too. we are hopeful to really get your thoughts on this as well. i look forward to the dialogue with the panelists and committee members.

with that, i think i am supposed to introduce some of our panelists. we are pleased to be joined by eight panelists who will focus on the investor perspective of these events. we are joined by a representative of exchange trading funds, retail investors, and individuals at asset management and mutual funds. we look forward to hearing from their experiences and comments on may 5. i was wondering whether i was supposed to introduce this group. we are honored to be joined in person by [unintelligible] marine o'hara, and [unintelligible]

enormously distinguished economists and professors in finance. i am bullring finance and economics. -- blurring finance and economics. mr. brennan used to run i think the largest mutual-fund complex. maybe you are second some days. it depends how you count. we are deeply honored by the six of you joining us. i think we might have the former chair of this agency and board governor director on the phone. >> mike mendelson -- i am going left to right. noel archard, head of u.s. products for blackrock, which

might be the largest asset manager. it depends how you count. [laughter] >> good mutual-fund. >> will come out differently. [laughter] >> charles rotblut, editor of the american association of individual investors. chris nagy, managing director, order routing sales and strategy, td ameritrade. kevin cronin -- retail trades. kevin cronin, director of equity trading at invesco, and pamela craig, chief financial officer, accenture.

we will hear opening remarks and began from the left. we will start over here. shiapiro ands chapiro and gensler, i have managed pension funds for endowments and publish public mutual funds. thank you for inviting me to discuss our experience of the events of may 6. the flash crash highlights risks in an otherwise functioning u.s. market. while investors managed to avoid damage, not everyone did. we could reduce the likelihood of a repeat/crash and work with this committee and extensive efforts by your staff, maybe the most important steps in that effort. we support quantitative methods in investment strategy. we invest in a variety of instruments, including equities.

our horizon is months to years. some investors' strategies turn over every few days, but none could be considered high pregnancy. we are liquidity seekers. we rely on liquidity providers to perform the essential function. in many of the markets in which we trade, there is fixed income. liquidity is provided by dealer funds, whose ability rises or falls with the help of the financial system. in the u.s. equities market, liquidity is provided by a broad base of participants. this was a benefit to all investors during the worst weeks of the financial crisis. our exchange traded markets performed admirably. those responsible were small electronic market makers and regulators who led us to a broadly democratized market structure. they should be proud of this achievement. we build safeguards into a trading properties and have him and oversight of important steps to protect client assets.

on may 6, our staff noticed early on the market was potentially disruptive, and shut down our trading. we did not suffer. we avoided trading at discounted prices. we were able to complete the share of portfolio transactions that day. nevertheless, may 6 revealed risks in infrastructure that need to be managed. i will highlight three. first, questions remain about the cause of the flash crash, but we know there was significant negative macroeconomics, heavy trading volume, substantial liquidity, trade reports that appeared to be erroneous, and a de-linking of trading centers. traders experienced losses will fearing there were flying blind. it is easy to understand why there would have felt compelled to withdraw from the market. meanwhile, liquidity demands continued to send market orders, and aware of of the

potential problem. i want to emphasize the importance u of -- of unaware. what alternative course could the events taken? perhaps it was our good fortune and subsequent trade report screened out the warning to stop. without that, selling may have continued unabated, causing a real crash from which it would have taken far longer to recover. the clearing of the order book may have acted like a circuit breaker, albeit a sloppy one. better market data, better exchange correlation, and better rules might have prevented the crash. i do not know. careful analysis of data may yield an answer. i encourage the committee to work with industry to explore this. we need to understand what role the members of liquidity had on may 6, and methods to better inform those participants.

third, the complexities of the trading environment should give us pause when seeking simple solutions. toward that end, the current pilot program may be a good start, but modifications may be needed. as recently as last thursday, iran's trade reports were issued. without broad access, -- with broad access, there is potential for substantial abuse. there should be consideration given to limiting the rules. another is market obligation. this will increase costs for investors every second of every normal trading day by reducing the availability of liquidity- providing capital and increasing its risk, and an insult to injury on rare occasions when markets are severely disrupted. market-making obligations will accomplish nothing. after all, the function of the market maker is not to correct as a market is crushing.

it comes to special privileges, and some markets may need this to encourage liquidity providers in the normal course of business. hear, the suggestion is that provisions will incur a liquidity provisions in extraordinary times. there will not. thank you. >> we are going to go down the line. >> my name is noel archard. i had the product team for the u.s. product exchange business. i appreciate the opportunity to speak about the impact of the flash crash on investors, and what steps we can take to prevent disruption in the future. as members of this committee no well, these have become investment vehicles for retail and professional investors. there are over $790 billion in assets. there represent 30% of the total volume of trading on national

exchanges and have become indispensable for a range of investment strategies. institutional investors use them for sophisticated strategies such as cash equitizations. retail investors also use them to build asset allocations as part of the satellite approach. with their low cost, transparency, and easy access to a wide range of asset classes, have been affected a variety of investors. there is value in being able to reserve the price during the day and to use stop-loss or limit orders in an attempt to control the price at which the transact. several market issues converged on may 6 to affect prices for u.s. equities in general, and etf's, for half an hour in the trading. we know that trading in u.s.

equities was largely unaffected and generally traded within normal ranges. did not.'s in our view, four factors contributed to market prices for some ets diverging from underlying value. there was sudden market freefall in the u.s. equity prices, which caused markets [unintelligible] to have difficulty in valuing underlying assets. second, anxiety over potential trade calculations caused the "providers to believe that pension strategies would be interrupted. there was market fragmentation were exchanged protocols increased selling pressure. there was unintended selling because of the stop-loss orders that were triggered, which increased the volume of sell orders. these turned into orders to sell at market prices. there were executed below

trigger points due to the speed of price free fall. all we believe the final impact on investors was limited due to widespread trade calculations, there was an impact. to better understand the impact, we at blackrock commissioned a survey in late june. we tried to learn from financial advisers, one of the largest groups of etf users, what they think. the survey revealed that the majority were minimally impacted by the market disruption and believed that market structures such as no reliance on computer systems were the primary driver of the crash. exchange ratting issues were seen as secondary. as relates to the macroeconomic and garment, the majority expect market volatility will increase or remain at a stable level of the next six months.

disappointingly, they anticipate a similar event will occur again no matter what solutions are adopted. the survey also indicated that most accounts are not impacted. of those affected, the most common was the stop-loss order executed at reduced value, which happen to a about a quarter of the people surveyed. advisers identified etfs as the best market vehicles to navigate a volatile environment, followed by bonds and mutual funds. this underscores the importance of strong market structure reforms to prevent future disruptions. we believe reform should include uniforms circuit breakers across all exchanges, making exchange trade cancellation rules less arbitrary in a matter that does not discourage the could to providers in times of market stress.

clear guidelines of writing rules. replacing stop-loss limit orders to specify a limit price for color, and expanding the role of lead market makers to ensure orderly market function. we believe these reformers represent a strong step toward preventing market disruptions in the future. we look forward to working together with members of this committee and the staff on this important issue. thank you for the opportunity to speak today. >> thank-you, noel and charles. we have your written things electronically to facilitate putting them up on the web. i do not know if we do. i was just asking if we do so the public can see your comments. >> thank you for having me. charles rotblut.

we represent 130,000 individual investors. we focus on giving individual investors education and information about investing. our members typically have an intermediate love and knowledge of investing. the have a college degree or advanced degree. the majority trade online to discount brokers. most follow long-term strategies, though we have some who trade a little more accurate -- and little more actively. many have questions concerning the crash. they are unsure about the procedures that caused things to become volatile. they are worried solutions have been not -- have not been established to prevent similar events from recurring. the wonder about how much control of stock prices has been ceded to congress. they do not understand how market-makers could have allowed stocks to falter. importantly, they are asking

what protections there are four individual investors. the biggest impact of the events on may 6, from the standpoint of the individual investor, was not the effect on brokerage account balances but the effect that it had on their confidence. they are concerned about volatility such as the large price swings. they think it could occur again. they're worried about the possibility of a stop order not being executed in an orderly fashion. >> thank you very much. >> thank you for the opportunity to speak today. i am kevin cronin from invesco. i appreciate unity to speak to you about the events of may 6. we're a global asset management firm operating in 20 countries. i will try to be brief in my statement. i have posted a more detailed

statement for the record. i will spare you any of the drama. we believe the crash was a result of costs and inefficiencies in the current u.s. market structure. it revealed the need for updated marketwide stock circuit breakers, effective and transparent procedures for resolving iranians trades, a review of the risks and effectiveness of market orders, alignment of the inconsistent practices and procedures used by various exchanges for price movements, an examination of the possibilities of market makers, and better coordination across all types of markets. removing all instability and volatility from the equity markets is neither possible nor appropriate. however, establishing mechanisms to address extreme price moves in the market, the volatility related to an efficient structure will be critical in

repeating -- to prevent a repeat of the flash crash. invesco supported the circuit breaker proposals as a means to mitigate the volatility. we strongly supported the amendments to the rules relating to the clearly iran used executions, to clarify the process and provide uniform treatment across exchanges. however, we believe the notion of taking trades off is detrimental to investor confidence. we would propose that the exchange's clearly defined and articulate the parameters that constitute iran used trades and program their systems to detect and reject trades outside those parameters. we believe the risks associated with orders during the drop in prices contributed to the rapid market decline on may 6. as clearly illustrated by the

events, there was a vacuum of liquidity. small-market orders can have an impact on the prices of securities. this vacuum was created when a massive wave of sell orders hit on market l triggeredrp's the exchange. subsequently, in nasdaq and other exchanges -- nasdaq and other exchanges reacted. this allowed other exchanges to ignore the quotes on it. the various exchanges on where to route their orders to fulfil their obligations, they could do so without consideration. the market makers and liquidity providers were widening their quotes or get out altogether as the " receiving became less reliable. small-market orders were

triggered and allowed to execute against limited amounts of liquidity posted on other exchanges and market centers. in some cases, the only quotes left were subquotes of market makers. the market has become more fragmented. we've not used them for some time. in light of these events and continuing issues, small market orders have had in the market, it has been recently with the triggering of stock market circuit breakers, we recommend that exchanges and dealers only except market orders which have collars on them. a colored order would only allow execution within a certain reference of the price. we also recommend similar treatment for stop-loss orders. this would give investors a level of protection from the impact of market orders in

current environment and with likely eliminate the triggering of circuit breakers. we believe the revision -- provision needs to be reviewed. he was put in place many years ago to prevent manual markets from unnecessarily slowing down trading. it was conceived when there were few high-frequency trading firms. the events of may 6 also illustrate the interdependency of markets. invesco strongly supports an examination of the equity options and futures markets and whether the rules need to be made more consistent across all markets. market makers of taken on more significance given the events of may 6. the sudden absence of liquidity in the marketplace of your role in the price decline.

several ideas have been before to improve the quality. that includes maximum spread obligations. an examination of other liquidity providers and high- frequency traders is wanted. invesco believes there are many beneficial strategies and participants. we also believe there are some strategies that could be improper or manipulative activity. this highlights the need for the industry to better understand high-frequency traders and firms. it is important for the advisory committee to study the impact of the issues we have mentioned, we believe the more fundamental consideration is warranted. this is whether the current market structure has become to focus on the speed of execution

over all other factors. at some point, we believe the speed and price discovery of an inverse relationship. this dynamic needs to be understood. thank you for allowing me to participate. i look forward to answering any questions you may have. >> thank you for those remarks. chris? >> thank you for the opportunity to participate on this panel concerning the may 6 market even. chris nagy i am, managing director of strategy for td ameritrade. it is based in omaha, neb., and was founded in 1975. it was one of the first firms to offer negotiated commissions. over the course of the next three decades td ameritrade pioneered technical changes like touchstone trading to make market access by individual

investors more affordable and transparent. td ameritrade clients predominantly trade equities and options. recently, we began offering the ability to trade futures and forex. td ameritrade has long advocated for market schechter's that create transparency, promote competition, and reduced trading costs for individual investors. as technology rapidly advances, it is more important than the regulatory regulators complete a comprehensive review the they are now undertaking to ensure our market structure remains among the greatest in the world. it is our intent to present these comments on behalf of our 7 million clients, based upon the views that they regularly expressed to us and in our experiences of providing service to them. the u.s. financial markets have experienced precipitous declines in a single day, including the 1987 market crash when the dow jones dropped 508 points, the

may 6 event in many ways was unique. the speed of the decline. the market decline was somewhat random and uneven. it had 90% temporary declines in some stocks while others were relatively unchanged. third and perhaps most importantly, it appears that the very nature of how the u.s. markets are structured was a contributing factor to the precipitous decline. the causes never be completely identified or understood. they appear to be in part because of the verse structure of the u.s. markets and the increasing dependence on liquidity providers who have no obligations to maintain two- sided quotes. it is clear the event has had an impact on investor psychology and trust in the markets. how do you explain to an

investor the company that trades at $40 per share and raise a few seconds later at a penny? investors are going to question the fairness of the markets. misgivings were voiced by investors who had executions' but were less than 60% away from the market. how do you explain to investors to trade of 61% awake was deemed erroneous but those up to 59% were not. how do you explain that some trades were busted while others were not? the answer for these clients will live in the actions week as an industry and regulators now undertake. we may need to adjust the way in which the u.s. markets are currently structured so that investors can trust that the price displayed to them as

valid, so they have confidence in the available liquidity, and do not believe the markets are rigged against them. the may 6 event was a wake-up call. it requires a comprehensive response. the panel today is just a small part of the appropriate response. it requires looking across equities, options, and futures markets and approaching regulation holistically. it requires addressing the imposition of circuit breakers and must include a review of rules, flash orders, access fees, high frequency trading, and naked access. for investors, we think the right approach is a combination of the fallen. first, we agree with the adoption of the circuit breakers as the first big step. the regulators correctly identified and took quick action to ensure that traders took a pause during extreme market movements. as everyone who has had to reset circuit breaker, they are a fail-safe that do little to

address the underlying cause of the problem. td ameritrade believes the regulators need to find a way to incentivize market centers to stay in the market, maintained two-sided quotes, and post size regardless of the market environment. the may 6 market event demonstrated that today's markets contain many players use their liquidity opportunistic lee. they apply it when it is in their favor and poet during times of market stress. 3rd and particularly in the equity and options markets, the sec should move was speed -- moved with speed on the proposals for access fees, flash, and naked access. as to the specific allegation that orders contributed to the downturn, i can tell you from our perspective such orders are important to our clients. in looking at our data, we do

not believe there is any basis to assert that these types of orders contributed to the problem. td ameritrade client orders were with an average daily volumes on a percentage basis. prohibiting market and stock orders would be a significant adverse, misguided, and unnecessary overreaction to the underlying cause of the may 6 market event. that would unduly deny retail investors the access to the markets they enjoy today. i look forward to answering any questions you may have. thank you. >> pamela craig i am -- i am pamela craig. accenture appreciates the opportunity to share our perspective on how the events impacted us and our investors. accenture is a global company

with $22 billion in annual revenue. we have over 100,000 employees, 32,000 in united states. our market cap is $29 billion. over 70% of our shares are held by institutional investors based in the united states. just under 20% are owned by current and former employees. of our current employees, 25,000 our shareholders. 62% of those are in the u.s. we recognize there is not total clarity about what happened on may 6. we understand that there was seemingly in perfect form of economic news around the globe, a reduction of liquidity, unusual trading volumes, and some technology challenges. based on what we have witnessed in the market that day and cents, there's every reason to expect this tcould happen again. we believe during times of

stress, all markets should operate under the same circuit breaker rules to promote orderly markets and investor and business confidence. we have a unique perspective on the events. the price of our stock went from $41 to one penny and back again and then closed that day at $41.909. later, the shares fell to $38 as liquidity evaporated in the equity markets. this triggered a specific circuit breaker. at that point, the nyse stopped its own electronic trading so that market makers could line up an orderly matching of trades.

during the transition of about a minute, trading in our stock was temporarily halted while orders have the option to execute on other exchanges. a few small market orders 400 shares in 10,00 a tense second window were directed to other exchanges. these exchanges were not coordinated with the nyse. expected market-making did not occur. these orders included 19 trades of 100 shares, each trading at one penny. trades below $16.40 were subsequently blasted. none of the canceled trains were on the nyse where the low trade for the day was in fact $38.75. this erratic trading rattled investor confidence in the market. it specifically affected our

investor base, including thousands of employees. our employees are granted equity compensation and participate in the stock purchase plan. it provides a way for them to invest in the future and participate in the success of the company. many employees participate in the plan. after may 6, many employee shareholders were concerned about why our stock was affected forces other large cap companies. we believe the sentiment is consistent with the concerns of retail investors. the joint cftc-sec report also highlighted accenture trading on the day. this brought further attention to the company. the partial trade cancellations have had an ongoing adverse affect on historic trading records. after may 6, exchanges canceled stocks between 2:00 43:00 that

were far away from the last trade. this arbitrary pricing threshold cost the 52-week low to be misleading to investors. it is disappointing that the 52- week low for eccentric stock is currently around $70. the reflects the malfunctioning of the market-making process on may 6 and not be true 52-week low. the low point on the new york stock exchange on that date was different. we commend the sec and exchanges for proposing new rules for canceling clearly in erroneous trades. we support efficient and fair markets. we also understand that the markets need to be governed by some rules. increased competition with more and better technology all the time has been good for the markets. it has driven down the cost of trading. nine years ago, a substantial majority of our trades occurred on our primary exchange. today that is only about 45%.

the rules need to be updated and modernized so that they adapt to how the markets are evolving and continued to work as intended. if we expect today's markets to function well and keep up with increasingly sophisticated trading technology, the rules need to be clear, coordinated, and consistently implemented. if something similar to the may 6 event happen again, investors could be deterred from investing in our company, even though it would have nothing to do with the strength of our underlying business. it would instead be due to a -- glitch.ch we urge the adoption of the new rules. expansion to include companies in the russell would include companies like accenture that have experienced severely

erratic trading and provide regulators with a broader sample. while we understand is good to pilot something with a smaller sample, it does not make sense to perpetuate different rules for different issuers. we firmly believe changes are needed. as noted above, investors in other companies remain unprotected by circuit breakers. we urge you to probably expand the pilot to protect these investors and increase confidence in the u.s. equity trading markets. thank you for inviting me to participate. i welcome any questions you may have. >> thank you, pam, thank you to all of the panelists. we're going to do this in an informal way. the wants to start with a question? -- who wants to start with a question? maureen, ladies first.

>> i would like to address this question to mr. cronin. you talked about the need for collard market orders and stop- loss orders. how would a stop-loss order like that work? i am trying to understand the logistics of guaranteeing an execution. ?t would simply be avoidvoided >> a market order today given the fragmented nature of the market has to be understood in the context of what the market really means. much of the liquidity available today is hidden or available in places that some orders do not have access to. our concern is that small orders, if not carefully

governed, and how big impact -- can have a big impact. we propose that market orders be allowed to continue into the system. it is easy to hit the market button. a suspect is more difficult to put a limit price in. if we were all in agreement, and the market order would have a reference price as soon as it came in. -- any market order would have a reference price as soon as it came in. it would not execute if it was unable to find a price within that band. this has worked in various forms and fashions in other exchanges. i think it has been very beneficial. i believe it would have the effect of getting rid of the nefarious problem that has erupted over the last couple of weeks. small trades are causing a circuit breaker elections and halts and stops -- in stocks

that have no business being halted for a small share amounts. >> this is an issue i am really interested in pursuing. unlike the committee to devote some thinking to the alternative. -- i would like the committee to devote some thinking to the alternative. circuit breakers could have a calming effect on the market. we have had a number of triggers. i would be interested to know if anyone thinks this has caused harm to the marketplace. and like to give thought to this particular issue over the next couple of weeks. i think that would be very helpful for us. >> chris and kevin may be miles away in terms of the issue. do you think the caller market orders --collared market orders would work for retail investors?

>> let me take both of those. let me take the stop order issue first and talk about that. td ameritrade offers that through our technology. we call it a trade trigger. it allows the investor to set a stop-loss limits price to track the underlying price of the security. when the trigger event hits, the order goes into the market as a stop order. the problem you have with ollars even though i like some aspects of it, the problem with some of the market orders by eliminating those in totality would have an adverse impact on retail investors for the following reasons. here is war. retail investors -- here is why.

retail investors really invest in the market at two points in time. one is in the morning right when the market opens. ironically, mr. krieger do not start until monocoque 45 -- circuit breakers to not start until 9:45. they go home and feed the kids. they get to their portfolio and reduce their investments. we see a lot of that. we see 15% of our trading day occurs at monocoque 30 in the morning even though the circuit breakers are not in effect until later. -- 15% of our trading day occurs at 9:30 in the morning even though the sector breakers are not in effect until 9:45. in a declining market with a lot of volatility, if it happens to miss even, it will not be a happy retail investor at all.

that is the problem you have. i think we need to look at the dressing the structure of the market -- addressing the structure of the markets. if they had not dropped like that, i do not think we would be sitting here today. there was a complete evaporation of liquidity in the marketplace. that is more concern to investors, rather than missing their stock price by $2. >> they are very interconnected. liquidity providers are generally watching things happen and making decisions based on that. as get into the system -- as skin to the system, -- as bad quotes it into the system, a

conceit heightened dislocation in the market. -- i can see heightened dislocation in the market. there was volatility a year-and- a-half ago. it seems to me that the protection they would get from a collared order would exceed any material consequence of not being able to sell in worst times. i would also offer the this is not exclude anyone from putting a limit order in below the market. i suspect that an investor who got irritated bought or sold at a penny. the real things that could of been put in place that would have prevented that for the seller and accenture as well. >> i would say one thing about aggressive limit orders. there are rules that prevent

high. the aggressive pricing orders in the market. we have to have certain parameters in the system to prevent that. that would need to be restructured if we were going to go down the road. the problem with that is what happens if the investor misses the collar. we need to look at the structure of the market, the liquidity in the marketplace during times of dress like on may 6, 1987, 1989. they are very similar in that the market went down. they need to go down in an orderly fashion. in 2008 when the markets started to decline into two dozen mine, -- in 2009, things work 3 well. what happened on may 6 was unique. it was different. that is the problem we need to fix.

>> i do agree. it would be nice to get something in place from a perspective of the collars or something else. when we did our surveys a month ago, 60% of the visors said they would use stop-loss orders. 70% said they would use market orders. i was in front of a group of advisers about three weeks after the crash. we talked about whether it was a good idea to use market orders. there was the consideration of getting rid of stop-loss orders. the sentiment of this group of 50 advisers was to be careful of fighting yesterday's battle. if this had been a day that was truly going down a thousand points in the market or more like some of the models were saying as if there were a treatment, they would have been upset if market orders have gotten blown through. they did not get executed

because the market was moving quickly. they would not have access to certain models. i do not think it is something we should ignore. we saw small orders pushing through. that was an issue. there is the larger issue of these interlinked events that came together. we should be careful of trying to solve the larger problem and not just the may 6 issue. >> i think you suggested what could be an alternative to collars, that is to shift the existing pilot on pauses to rolling when its ups and down -- to rolling limits up and down. it has two benefits. if you are concerned with a single trade stripping beyond the possible levels -- pause

levels. secondly, it does not require a pause of five minutes if there is interest or the future reacts and bounces. that way you do not hold the market up in those circumstances. yet you do build in on an organized basis across all markets an assurance that stop- loss orders do not strip past the limit or least provide a firm a chance to react to the stock losses -- stock losses stop -- stop losses before they trade again. the downside of limits in a terribly fragmented environment like the u.s. securities markets is that they are only uniform in some ways. their uniform indention trades

do not go below them. they're not uniform as to when the market place starts up. there is the potential you could have a single, random bounce trade and still have serious pressure. you would lose the chance to have the option that the pause provides. another market starts up at a different time than the other markets. that market will know when its order hits. is that a fair reflection? given the pros and cons, do you think that is a better solution? >> the public may not know what a ruling limit --rolling limit quote is. try to briefly say what that is. >> that was very articulate for

you. >> that is always a miracle. >> that aside, there has to be a bifurcation. you have circuit breakers and a collar arrangement or go to this limit up-down. a stock at any point and time would have a percentage it would be allowed to trade up or down. it could only trade down to the limit price and no further. for 10 minutes, it would trade down at that when the price. it has the opportunity to trade above that it cannot trade below that. if after 10 minutes, it continues to trade at that price, there would be a two- minute hold where all investors would hopefully take into consideration what had happened. the hold with and and the stock would be free to trade below the first limit price -- ahold would be over and the stock would be free to trade below the first

limit price. >> after the hold, would you have the market reopened the stock? with all markets simultaneously try to reopen the stock? >> i would prefer that it be a coordinated the event like the nasdaq or you have multiple players putting indications in. to me, and that makes more sense to have all the buyers and sellers together without dislocation. this gets to the issue of the problems we have today. markets are not aligned. people are doing their own thing. even if you come up with a sensible solution, the sense of things are not linked together. the beneficial outcome we think could happen will not if they're not linked appropriately. >> let me follow-up. the cynics say there are 40 trading menus for a guy like

you, not someone who trades through td ameritrade. do you think that coordination can occur in other trading venues to make the net effect that you want out of that t ype of limit? some think it would be easy to do in one market but not another. >> most institutions would take the opportunity to make sure that they were in the right venue to ensure they are protected as the stock reopened or on the source of liquidity. we have a very fragmented market. in a different market centers doing their own thing. -- we have different market centers doing their own thing. this will be a very difficult thing to fix.

generally, we would be very supportive as an industry to get to a better location where things are linked better. we would not have to hide so much of our order flow. we would have more incentive to post liquidity. some of these dislocations would not happen to the magnitude that they have recently. >> a note on the circuit breaker. we are fans of this trading idea. it has been in place for 20 years. it seems it has worked effectively with the limit down strategy. halting and stopping trading is always a bad idea because of the devil and the details of the opening process. i said this in my opening that the circuit breaker rules do not begin until 9:45. the average opening for markets is 9:30.

it is an ironic situation to be in. with the circuit breakers, the problems we have had with those have been in the reopening process. citigroup was triggered on an erroneous trade. the opening process that occurred after that was not equal amongst all of the exchanges. same exact thing with genzyme a week ago. it was an erroneous price on opening that triggered it to go into a halt again. with another wentch yo into the regular trading session when it should of been extended hours. the reopening process tends to be difficult. there is not a lot of transparency when you see a halt. if you are a retail investor

looking at the quotes, it does not clearly say the stock is in a halt condition. that is a confusing environment for the investor. when you get into the trading band issues, when you start harmonizing across the different products and agencies, you can also tie that into a lot of the etf products that have the erroneous issues. that is my thought on the direction that we would like to see the overall circuit breaker system go. >> one topic leads to another. from our perspective, we are deeply concerned about the reopening of the securities. closing them is only half of the story. if there is a car pileup, you need a state trooper to get

traffic moving. when we think of the role of lead market makers and specialists going back five for six years, he cannot go back in time -- you cannot go back in time in this rapid environment. there was a benefit to having someone there the regulated activity on the exchanges. as we balance obligations with incentives for players in the marketplace, we can look at making the lead market maker responsible for the orderly reopening of the markets. their other obligations they might have to step up to. we can look at those linking the issues of the time of reopening. >> there was a difference of opinion suggested by different panelists.

mr. mendelson, you were right in that no one has ever seen a market obligation that encourages some to go off a cliff in a steep downturn. if you look at most of the studies, it would show when there were more incentives for market making, they ended up not long ne -- net long, especially when the markets were going down. their two key pieces of market obligation. one is another piece of addressing accenture pricing concerns. that is addressing subquotes and at least requiring a market maker not to have the decided -- a two-sided order outside of

obligations. >> some are obligated to provide subquotes. that is not helpful. it would almost be better if there was not a quote. i do not see what economic function that serves. >> i know you both suggested he favored increased incentives and obligations from a market-making standpoint. my question is about incentives. we have a very fragmented set of exchanges that have relatively little pricing power. they have little ability to attract. one market competes on market- making obligations and provide significant incentives. that would be the new york stock exchange.

other markets choose not to provide those incentives. if there was a view of something more than getting out of this problem in having narrow quotes to be around the best offer and waring on both sides, it would not create miracles but would probably avoid having single relatively small orders stripped through the book. that does change the cost benefit issues for market makers. what incentives would make sense as non-market-making participants to encourage that? >> market makers are very important to us at td ameritrade. they provide consistency in the marketplace. if there is not liquidity available inside, the market maker will step up and fill the entirety of the order so the client got the price they saw when they entered the order.

in terms of incentives, there has been talk about creating rules by forcing market makers to quote inside of the 10% threshold. we have seen this problem over the last decade. market makers are fewer and fewer in number. a lot of the growth and overall liquidity providing has been in more opportunistic liquidity. i will be there as a fair weather trader. if it turns dark and gloomy, i am out of there. i read about it in the journal every day. to counter that and give incentives in the markets, i think there are a couple of things. i do not think this committee has the power to do this, but it would be good. that is tax incentives. that would be tax incentives for liquidity providers in the market. that would be very powerful. it would be similar to some

cboe.t cbos on the this committee does have the power when looking at market data to work on incentives. there appears to be a large dislocation in the cost of the data and getting it from some firms. we do not see a fair allocation of the overall infrastructure of the data. that is a very good resource to look at to see what opportunities can be created in the marketplace. in our markets today, we incentivize the quote. if you look at all the different market structures and exchanges out there, we provide a lot of incentives to post a limit order but not for size.

there are ways you could change the structure so you are incentivizing size rather than just a limit. i think they did a wonderful job of making the markets more electronic. i think the overall notion access speeds in the market should be looked at as well. >> there are two boys to look at this. it is easy to say the market making function failed at this particular point in time. -- there are two ways to look at this. the mechanism worked well. the incentives are in place. if you are able to understand the value of the underlying securities in a basket and understand what he can sella for, you have the

ability to make a reasonable market and make money. that works. it does not work when they get that information and pull away. the mechanism is generally in place and works well today. we want to be careful that is not upset as we proceed. if you look at market-making traditionally, market makers have been givinen some advantag. with that, there was an understanding that there was a commensurate amount of obligation. there are some firms that are market-makers. the spread mechanism went away. with the influx of new participants and high frequency traders, the ability for traditional market makers to participate and to meet -- compete has been compromised.

we have a group of investors with high frequency traders that have an advantage. they do not have a commensurate amount of responsibility. is it fair that they have direct access to exchanges where the rest of us are looking at something different? is it fair that they have co location and have a millisecond advantage? maybe the answer is yes. maybe people can intellectually argue the point away. i believe there are real advantages conferred. as such, there should be real obligations. if not, everyone should have the same access cqs. co-location would go away. >> can i comment on that? >> i also want to let the panelists asked questions. go ahead. >> we track our transaction costs.

we have a history of this over a long time. our transaction costs have gone down steadily. many years ago, a used to sit next to a large group of market makers. there was a group of participants with significant advantages. the result was that investors paid significantly every minute of every trading day. when there was a market disrupted the event, it did not help us. in october of 1997, we had a crash. it was not like 1987, but we were down on the s&p 500. market makers were not there to buy your stock at about price. they will not be now. we are hoping that by providing special incentives or obligations or preferences for

market makers that they will do something that they are not going to do. they will not stand there and buy stocks at the wrong price. on the other hand, on an ordinary basis, the system today allows us to trade more cheaply and more stocks than ever before. the market making function to date has been described as opportunistic. i do not think it is. they are always there. on a previous panel before this committee, one participant suggested that obligations that they have to be there 97% of the time. i would say with no requirement for obligation, electronic market makers have been present this year, what we would call a bad year, 99.97% of the time. there has probably been 20 minutes were some of them have failed. i do not think an obligation of

97% is helpful. it will not change a thing. >> i was wondering when we talk about incentives for market makers, does it make sense to about this as time bearing. there would be times when you would want market makers to stay in the market. would such time varying incentives that could be quite substantial because they would only be for a small amount of time, would this have an effect in a temporary market disruption? it is not going to stop prices from falling off the cliff and that is what we're talking about, but it would stabilize and event potentially like the flash crash.

>> if you have a large enough incentive, it might work. you are facing enormous risks. if you have an enormous edge, you are going to be more likely to participate. it may have to be too big. it might have to be a very big incentive. nobody would expect any person in any location to catch falling knives. on the other hand, market-making is part of what the market structure is. hopefully they are they're making fair and efficient markets. that facilitates interest and confidence in the marketplace. i would not subscribe to the notion that market makers should step in and absorb half a trillion dollars of market

losses. on the other hand, that is why you have circuit breakers. at least getting to the point of hitting the circuit breaker or the limit down would be fair and orderly. walking away does nothing. nothing good comes out of that. we are not talking about this particular market event for market makers standing up and taking one for the team. it is more of an overall effort to ensure that all of these features are in place so we do not get any event like me 6. bad markets are going to happen. we have had more than our share over the past few years. may 6 was different. we had evens with lehman's and what was happening increase. the market has evolved to be so electronic with so little communication between exchanges that this will invariably happen. it was not right. there was a huge price point

drop that rebounded back. that clearly tells you something is wrong systemically. it was not the event or shop to the system that caused an erosion in the value of stocks. we are trying to address the everyday life and investors and prepare for these events, making sure we are not causing them by not paying attention to details. >> most of the market makers we spoke to after the event felt the was the right level of incentive in the market. that is why they were in there. the trouble is that no regulation or amount of obligation -- someone is not going to put their firm out of business over the course of an afternoon. not to state the obvious, but i will. this was really a remarkable

event. we're talking to the market makers throughout the afternoon. the course saying their models or anticipating a 5000 point decline -- they were saying their models were anticipating a 5000 point decline by the end of the day. there were very concerned. when we look at circuit breakers, market makers are there to help with the orderly flow of traffic in the market. they need orderly markets to operate in those situations. these things give them confidence. when they are doing trades in the market, they are hedging. no market maker wants to beat overnight holding a long or short position. they want to be neutral to the market. if they are not sure about the parameters for cancel, they will step away.

even if there is a line, they will not want to take trades up to that 20% line in case they will be lopsided in their heads. concerns abouther values similar to the futures markets. what do we facilitate to make participants in the market be there through thick and thin from a structural perspective rather than from a compensation perspective? if the structure is right, they will be there to participate. >> your idea is intriguing. i would like to give it further thought as to the implications. the retail investor, we get about 15% of our orders overnight when they go home. the other times are during

market to rest. they are at work and the co- workers tells the market is down 600 points. they decide to take a look at it. we got over hundred orders on accenture down to 88 cents. we ended up correcting that. the reality is that 3% of the time, we really need to consider putting reductions in. in 1987, we have something that worked. the market rebounded. the fear subsided. the market started to rebound after the second hold during that incident. it has been a while. the combination of incentives and structures we are putting in to go along way to improve confidence. >> we have talked about stop

losses, rolling limits, challenges with three opens -- the opening. >> how do you incentivize greater depth in the market within the structure of the market rules? are there some that would do that better? >> i think when the commission put forward the concept on market structure, it has a lot of noble thoughts on how to change market structure for the better. i think there are a lot of things we can do to ultimately change the structure. one is how we incentivize the quote today.

that needs to be looked at. we focus so much on the quote but not all on the size in the marketplace. >> can you be more specific about how you would answer that? >> how i would get liquidity into the marketplace? i think ways you can start getting liquidity into the marketplace are through tax incentives, market data incentives, changing the structure of how you provide rebates to limit orders today. i think those are a couple of important steps that you could take to do that. tend --'s markets, we it seems to be difficult to trade in the visible market.

the minute you expose your hand in the visible marketplace, the liquidity is gone. evaporates. -- it evaporates. if there are processes that can help bring the liquidity into the visible market place, i think that is important. a think some of the specific rules we are looking at are very important measures we can take to bring liquidity back into the markets. i will not say there is a silver bullet solution. i think it is a more comprehensive process that needs to be undertaken fundamentally with the entire market structure. >> i would like to follow-up on that quickly. i do not want to suggest we're headed in this direction. if it is proposed that orders

have to have a minimum life span, it you could incentivize market makers not having the rule apply to them. we could think differently about the market structure and layers and the market structure of how we would like to beat and what incentives might exist. there might be limitations placed on the way trading is done today. some of those limitations might not apply to market makers to incentivize them to be inside. >> i believe there is a process in place where they charge for cancellations on a number of orders. in our structure today, we have a profound amount of orders. you see 70 to 90 updates in a single second. a lot of these are light

flickers. those are actually orders followed by an immediate cancellation. the idea of taxing annualizing the infrastructure to get the data out to the retail client. i do think that there are things that can be done at that everyone needs to pay their fair share to utilize the band with a half. we do not use the largest pieces of the pipes. that seems unfair. i think things like that -- taxing cancellations -- are ways that -- and forcing people -- if you are going to put up a quote, may be that quote does need to be there. the market data plan actually requires that the quote is a visible. >> one of the things -- i was looking at this panel.

i am interested in, as trading velocity increases or trading times have gone down into microseconds and nanoseconds, and order size has come down -- on most days, the average trade is five or six contracts, $350,000 notional amount of stock. market makers -- we have studied this -- there are dozens of market makers but they are staying relatively flat. their whole economic model. they are not putting a couple billion dollars on the line. they just simply are not -- on the average trade. how in the environment where average trade has come down, average trade time has come 0 to 80ll the orders, 7-8

in a second, and yet, in normal times, a 99% of the time, the cost to trade has a, way docomey down. and in most times there is an enormous benefit to the american trader. what happens? that is a question i am framing. maureen has a question. >> i just wanted to follow up on the idea of incentivizing on size. one direct way to do it would be to change priority roleules. that would incentivize size, but the retail traders would step behind size. as we think about these priority roles, how do we sort through this? are you in favor of a change in priority rules?

>> when you look at the investor -- the beauty of dealing with market makers out there, is they understand the importance of taking care of the investing public. there are things you can do in that particular instance. in fact, there are a lot of things that were done back in the early days when it new york treated a lot of securities and way toeep but, onbook, one incentivize is they would match the liquidity available. when the order became available on the new york, you were executed for retail and limit orders. it was a way for the retail client to almost get double protection on the limit order. if you incentivize the market maker, things like that could be created in the secondary market. that is an intriguing idea, to bring size back to the marketplace. >> can i suggest that the bigger problem is that institutions have no incentive to post real

liquidity in these markets. nothing could be clearer than to watch ibm traded down in a vacuum, and some of the other big cap names that ordinarily would have had significant levels of interest on that book, but because of the predatory nature and of some of the participants today, we have no incentive to pose a large amount of liquidity. transaction costs have come down. could they be lower decks are the dimensions of cost we cannot understand today because we are not sure of what the double quote this? none of us have clarity on what the real supply and demand is on most issues. these are fundamental issues of what the value of the securities market is. so i submit that are more important effort would be to try to help institutions come to a better understanding of how we are incentivize, to send more of

our orders directly to the market and post them so people can see them. priority is a good point. a lot of people are talking about whether there should be a trade at rule. not only is there a top of book action, but the first one in gets executed. some others would say, cannot do one part of the book, do all the book. i am not prepared to go there just yet, but i do believe that if we are not finding the right mix, we need to have that in our arsenal. make no mistake -- if institutions had a higher incentives to post limit orders, -- if other is a jump in front of us, we hide them in dark pools. we worry about their infiltration in draark pools --

5000 quote in a second. this is called quote stuffing. what in the world as the value of that enterprise? so let's concentrate on some of these things and get more to the fundamentals, which is creating a market where transparency and posting liquidity is not only incentivized but creates inefficiency for all participants. >> i want to make sure -- there is one issue we need to get to -- etf's. >> following up on this a little bit. the one time where these issues become relevant is if you have rules about the rate of decline of stocks. then there question of who gets -- you have clearly a statement of excess demand or supply that is being manifested and you are

restricting the market. at that point, who gets the priority of fulfillment makes a big deal. one might argue that, going back about havingoint it sensitive to the time, this is an automatic wage were the greater the market imbalance, the greater the value, the privatization rule -- the privatizaioritizatyioion rule wd then have greater depth. >> this is not so much about the flash crash, although there is a

correlation. we do not know in this case whether the flash crash was an alternative to oil and real crash. it was a bad day. we do not know. -- whether the flash crash was an alternative to a real crash. when we talk about invesco not having a incentive, i think that is true. transaction costs are much lower. trades a little bit like are repeated game, where you need to adjust to what the participants are doing. other participants are showing smaller size and trading smaller lots more frequently. others have to adjust. if you do not come at you have it -- you're at a disadvantage. there is only so far it can go. other participants have to change their trading size. if they do not want to trade their trading size, they will be disadvantaged.

it is not clear at all that that had to do with the flash crash. >> i totally disagree. liquidity was the issue in the flash crash. if people had more incentive to be there -- by the way, we came rushing in to buy a number of securities that were dislocated. others would have then there; we would have been there. i think it is exactly related to what happened here. confidence in the markets is everything. whether it is the issue words or participants are just watching -- whether its the issuers or participants who are just watching. until we have a level and fair playing field, we will have these kinds of problems. >> as i listen to this, i agree -- we are not really addressing the flash crash problems which exist, in my mind, because of

some problems that have existed in the high-frequency trading market. we have computer trading going on with the retail investors severely disadvantaged by others who are able to trade in an automated way. we have programs that are established and are not subject to human intervention so that we are talking about how to deal with all whole series of traders who are programming their computers to trade based upon the events they could imagine, and if they do not imagine a really serious loss of liquidity in a way that is realistic, we will not get -- we will continue to have these kinds of the dense. i just do not know what is -- we will continue to ahvhave these

kinds of events. i do not know what we can do to avoid a computer-generated loss of confidence. >> i am not sure we understand what really happened. i am sure you are working on that. but there are few things that we may have to look get -- the liquidity demand is. there has been less focus on that. we have are reasonable view that the liquidity providers went away. we have yet to understand why they did, because their market data appeared to be corrupt. there were correct prints that look bad, but things went off the rails from there. there was no connection between the information that the liquidity provider has, whether it is a person or whether an electronic system, that says, ok, this is scary, and at the same time all liquidity demand,

whether in institutional client who is sending orders who is not in touch with what a market maker is thinking, and you have this disconnect between what the liquidity providers are thinking. they are saying, i have to go away. the liquidity commanders keep going on their merry way sending orders. that is where the imbalance is. it takes two sides to have an imbalance. we have a lot of focus on the other side of the equation. to respond to your point about what the computers are doing in retail, retail has been a very sick to begin winter because their trading costs -- retail is been a very significant win ner because their trading costs are less. other machines of being on guided, they are not. there are people sitting in front of those machines, and those are the ones that turn them off. there are people sitting there,

just like in the old world and there were people there to not pick up the phone. ." that we have seen something like the exchange traded fund. it is difficult to say, are you getting the right price for ibm? we have a range that is trading and a lot of different -- the costsok at etf's, of acquiring that basket for a large institution. the spread, acquiring that in the market, for the average investor is inside of the basket because of the activity going on in the market. for many hours of the year, i would say there is a benefit there. we will go back to this interlinked situation -- how you define high-frequency trader. i have not heard anyone that come up with one solution.

i do not know much about quote stuffing intuitively. that does not sound like a good thing, but i will admit i do not know. i think we have to be cognizant that even long-term investors want to sell their securities, and you will not find another long-term investor to sell it to all the time. there is a lot of investor trading going on in the marketplace. what are the behaviors that we want to link here? if kohl location of a server farms with the day that -- if co-location of server farms is necessary, maybe that is something you give to a market maker. for doing that co-location, maybe you have to say there are three levels of orders with size, because anyone can come up 97% and throw out the best bid offered in only sell shares. we have to think of the behavior of the marketplace -- is to try to negate 20 add minutes.

>> can we shift for a moment? between these two firms and one other firm, it is 80% of the etf providers. you said something in your opening remarks -- you said etf's followed. in fact, i thought that at the critical minute, not just dozens but hundreds of etf's were breaking down early. one of them was the largest vanguard of those. what do you think it was? 5, 6, 7 minutes before the dive there were so many etf's that were down more than the market. why? i guess i would like to see net data because i would not agree with that statement. >> from what we have looked at

at the individual securities of the underlying baskets -- >> that is a very different question. i am not saying whether the etf's reflected the time. there were a lot of etf's in the 6 minutes before the dirvve that were significantly down. thatis it in etf land you think has a higher proportion of us did it trades? -- of busted trades? >> i would still assert that i did not see and i would have to like it any data you have that the etf's were leading the charge on this. the problem with pricing -- the market value follows the value

of the underlying securities. the pricing put out by the market-makers is determined by calculating the weighted value of the securities that make up that etf. as a became more difficult to come to that value, as they were rapidly dropping, you can think gion in thecontingeaigion basket. the confidence level in the the eft -tf --d price of the closer they got to that 10% threshold, that is where you saw the rapid acceleration of the disconnect between the price of the etf and the individual securities. a number of reasons for that, one of it is understanding how

they calculate the price based on the underlying security. you also have the situation and that some of these people we talked about, some of the electronic market makers, are not calculating the price of the underlying securities. they are looking at the lead market maker. as those market makers were unable to calculate a price, then the opportunistic traders also went away. you raised the point of etf's being a disproportionate number of canceled. they make up about 30% of trades on any given day. they were about 50% of the cancels. the reason we see for that -- what we saw was once the self- help provisions kick in, over 90% of them are on the new york

program.cangchange for the lower volume etf's, about 60% occur on nyse arca. where the liquidity is most important, where the trades would go off nyse, where there is more sellers than buyers, you had that. that is why you saw a disproportionate amount of etf's cancelled versus ordinary securities. >> i agree with your answers. >> with respect to self-help, there is a tendency for that to be the deepest books.

i would expect waiting for the analysis, that is one reason why the etf's were a lot of the cancellations. self-help today is driven by sec, specific standards from a standpoint of what in exchange must see with respect to response time on their orders before calling self-help. it sounds like you think that some of the calls were too quick or something else should have been. my question would be, how would you change the self-help requirements, or would you look at self-help with respect to a primary market as perhaps another reason to have a brief pause or something else? would you agree that self-help did not work terribly well that day? what would be the change that makes sense? > if i could add on to rick's

question. an did you think it is beneficial to have something like lrp's in existence on the one major exchange but not the others? not to steal your whole question, rick. there is a semic-colon in between. >> we do not have two hours. >> one point i wanted to make on etf's. one theory that i have is that exchange rate funds are very important to retail investors and in pfizer's. we see quite a bit of that business at the firm -- it is a very important to retail investors and advisors. >> say what that is. what does that stand for?

>> ipov? the price value -- the mechanism that allows you to calculate what the value of the etf is. >> that is not transparent. >> it is not disseminated in the price feed or by the underwriter of the etf. we saw that on one of our products. that probably is partially responsible for it. getting to the issue of -- i think similar to the circuit breakers that we just installed, the self-help rules have an if you trigger finger available to them. there were no corporate guidelines available when that was implemented on exactly when or how we should implement the self-help rules. it is not standardized across

the exchanges and is not consistent. that is the exact same issue with lrp's. they are not on every exchange, and that created on may 6, it created a dichotomy in trading in that was it a real price? was it as self help? there were self-help rules that were called. in order to fix that, the rolls across exchanges need to be consistent -- the rules across 16 disney to be consistent. even with this circuit breakers, they are not consistent -- the rules across exchanges need to be consistent. that is the most important thing that could happen with the self help change. >> from the competitive markets perspective, you want to help self-help. if there is a problem at exchange "a," the whole system does not grind to a halt.

that approach needs to be uniform across exchanges. you do not have a situation where you are turning it off in one place and have that flow into another. just to clarify, the iiv's, indicative values, a calculation of the underlying securities, it is usually touch elated by the exchange or by a third party and it has a ticker assigned to it. it is an indicative of value. we have seen plenty of times or the value of the etf is the price discovery mechanism. if you think about domestic equity etf's versus international, iiv is more clean during market hours. for international security is where the underlying securities are not trading and you have to do -- not as clean linkage.

i want to be clear on the benefits of these iiv as a mechanism. it is not used by market makers as a means to get to a price of an eft. >> so, can i just add on, on self-help? rick and you were involved heavily in these discussions. the whole notion was to facilitate competition amongst marketplaces. the new york stock exchange had a 60% or 75% market share. many of us were concerned that our orders had to be subject to auction market process which we did not what. they were not executable orders. we wanted that change. part of that is that you create the self-help mechanism that would encourage or even discourage, certain manuel exchanges from trying to always have -- certain manuel exchanges

from trying to always commandeer the order flow. self-help was a way you could avoid a market who was trying to get their own market share up. there is an inherent conflict of interest between the exchanges and self-help. if you ignore one market, presumably you get more market share, right? and markets, all exchanges are for-profit enterprises. that is a big difference from when this rule was put together. i do think that lrp's are reasonable pursued. i do not think they should be pushed on all markets. if we have learned anything in this enterprise it is that taking time and making sure we understand exactly what is going, whether that is in seconds or minutes, certainly can be debated, is not a bad thing. if we can get to a market

amongst all the exchanges that supported the ability to take inventory of things after you get down to a certain price dislocation, i think that would be a workable and efficient and for market. >> on self-help -- i would be interested in seeing something as simple as, if you declare it, what are the reasons for it? do you have to go back to the reasons for regulatory body and say we filed with self-help and this is the point behind it? there is a clear trail as to why it was called. was it for a good cause? >> there are hundreds a day. i do not want to speak for the sec, but i do not think -- there is a record keeping requirements and a justification requirements with respect to self-help. i think actually there is some fairly specific standards with respect to the delays and returns of orders, delayed or exchanged. >> on self-help, i think there

was a provision, as i understand it, that if it is longer than a second that you do not have connectivity and you can judge what connectivity is, then it can go under self-help. we are running a little late. >> i want to ask about specific. you keep wanting to get them back to etf's. he had a definitive recommendation on circuit breakers. on the treatment of etf's. what did you mean by having circuit breakers be the same for etf's as for stocks? >> our view was, we were concerned early on when the pilot first world out on the thought of having stocks in the circuit breaker mode and not the individual -- >> not the etf's that might have those in the basket. if there was a systemic issue,

on any given day, one or two stocks may stop trading for a variety of reasons -- this goes back to what i was saying that market values -- market makers calculate the value based on underlying securities. if one or two stocks stopped trading and it is for no reason, that will not disrupt their ability to price the basket or confidence in the pricing level. if a lot of stocks are going and they stop, but the etf is still trading, you are and price discovery mode -- for the long term, this seems like there should be as synchronization between what is happening versus the underlying securities. >> can i press that to make sure i understand? as the pilot moves to a second phase, a large number of etf's will be pulled in. beyond being subject to the pause, you also think an etf

should stop if a certain percentage of the stocks in the etf have paused? >> i think that would be difficult to put together. the etf still has to be plugged to its value, where it started the day, because there should be a safety net beneath the etf just like there is beneath the individual securities that make it up. >> one thing that the sec and i will be looking for is if -- there is the broad market circuit breakers, which we know we will get advice from you in a timely way, right? we will get that on the broad market which are these 10% and 20% markets. etf's start to blur into that. if you put five minutes pauses wentf's, if spider 500

into the five menopause, what does that mean for the broader market? into the spider 40500 went a five minute pause? i raise that as a question for this panel that i think we will all want to get your advice on. >> one of the things that many of you brought up today, we have not actually discussed at all, and perhaps that is just as well, but it is the question of what are the rules for breaking trade. we talked about callers as ways of pre-trade, breaking trade before they get entered, but the difference between breaking trade after wardwards s

you know more by the time you decide to break the trade it than you do before. do you really think that rules should be set up so you would know ex-ante whether a trade would be broken? if so, maybe this is the same as the callers we were talking about. >> absolutely. one of the major issues of may 6 was that no one knew into the wee hours of the night exactly what percentage was going to be, and there was a lot of discussion. it is in the joint report regarding the "arbitrary decision," whereby the 60 percent was reached. i believe that any rules, which i think clearly erroneous is a good idea. it is one of the unique things we have and our capital market structure that other systems around the world do not have. it is never enjoyable, but i

think it has worked well. the rules need to be clear, concise, and expeditious is so that we are not it 8:00 at night on may 6 saying, ok, 60% away. those trades would be busted. i think it has to be a much more clear process and coordinated across exchanges, and it was not at all. >> a quick follow up on that. did i hear you right in your initial statement that you are satisfied with the new proposed rules of the exchanges with respect to this type of event? >> i would say, yes. it starts to go down the road of consistency coupled with the stock by stock holds. have a viewd you on that? agree and i support what area. is hard and for us as well. of the day, we did heck was going

on -- it was heartening for us as well. >> i want to add, i think those rules need to be communicated. we heard from one investor that they had a stock drop of a 45% that was not broken. he called us up a week after basic wanting to know what to do. i think it needs to be clear to the investors, these are the rules that will cause the tree to be broken so they know what to expect. -- that would cause the trade to be broken so they know what to expect. i do not think you have one without the other. i think there needs to be clarity for all individual investors a going through the trade. >> we still neeed to hear from staff on the report. if there are more subjects -- >> i want to pursue the question about restarting. two questions -- one is, what are the consequences -- you said

it was upsetting it was not done in an orderly way, but who loses and how significant is this? obviously, it would be better if it were not. is this a very significant thing? suggestions about how it might be done. >> this is the re-opening after there is a five minute paws or circuit breaker pause. >> the opening process these are some of the most difficult process used today. when you have a multitude of different market centers, that is something very encore needed. unlisted markets, you have two openings. those occur at different prices, very confusing for investors. at the same time, adding more opening process into that, when we can open at 9:00 in the morning, i think is something that needs to be considered. that is why it gives me great

concern when we are holding stocks and starting a reopening process because you get a lot of confusion. and with the issues we have had with the whole did stocks in the new program, almost every one of those have spent it attributed to help the stock we open again once it was closed -- reopen again once it was closed, hewlett-packard, for example. >> yet there is a trade-off. no one suggests this process would be easy. what are the consequences of not doing it? i think we've seen some evidence of that. i think that is worse. what could be the preventative maintenance? >> what happens when you place an order? how do you -- and there are different prices in the beginning? >> it is not an easy process, i will tell you that much. we try to educate our clients about the differences in various openings across various markets.

in this day and age, even the options exchanges, we have eight with eight different opening prices. it tends to be very difficult. we tried to use technology, so if one exchange opens before another, we tried to pull those orders back and send them to the other exchange. there is no easy process. it makes it difficult. actually, it is a subject of a lot of client complaints, for not understanding the differences in market openings that exist. for issuers as well, seeing different opening times it tends to be very confusing. lf operatesause itseelf differently, right? essentially, it requires a trade from the listing market before anybody else trades. are you troubled by that, or do you think that makes sense?

>> no. i think that makes sense. i think it is still a little confusing. kevin brought up a good point, which is what is the alternative? and the alternatives, if we were not to have that, it looks worse. so i, again, with stock by stock halts, i would not like to see that is the ultimate end solution. we're talking about trading bands and limits down. limitting bans and down. may be changing the stock by stock called to something like? >> there are indications that investors get when these things are about to re-open. from an institutional perspective, that is probably easier to source than the retail investor.

>> other topics? i want to thank you all, but i want to bring it back to pam's -- the most riveting testimony come up with all respect -- we are fortunate to have commissioner done with us today -- commissioner dunn with us today. it is a massive pileup. fortunately, he is here and healthy, more than bruised and battered. but the same way. for 10 seconds, somebody sped through a stop sign. and for some 10 seconds, 10,000 shares, which is nothing, took penny.ock from 38 to a

we cannot have that. that is my direction that i am giving to my co-chair for the advisory committee. it could of been a personal investor as well. something does not feel right at 10 seconds, 10,000 shares it takes you from $38. your market cap at $38 was how many billion? >> less than 29 billion. >> consequential, $25 billion to $35 billion of market capitalization, at least on paper, in 10 seconds was less than $10 million. that was not a true reflection of supply and demand. so that's what we're looking for good advice for. >> that analogy brings it home.

thankfully, both of you are here. i want to thank each of you, because this has just been tremendous. if there are not any other further questions -- no. we will take a few moments before we hear from staff. we have to subcommittees' we set up. officially the be to report -- they need to report. we have chairs. if you want to pick chairs, then you can report, but we need for the public have some staff comment report on the subcommittee. we will take two minutes. we want to thank our panelists. i cannot remember her from the staff will sit down and give us a quick -- who from staff will sit down and give us the quick review.

♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> tonight, remarks from president obama on the gulf of

mexico oil spill. earlier today, he visited panama city, florida, and gave a statement about where bp and local communities go from here. watch his comments tonight at 8:00 p.m. eastern, here on c- span. this weekend on "book tv" claud steele on the state of education in the united states and the effects of stereotypes on testing. on "afterwords" our view of war as adults is tshaped by our views from childhood. also this weekend, our 2010 throughtful book review. for a list of programs and nonfiction authors, visit booktv.org. >> now discussion on efforts to bring high-speed broadband

networks to local communities. you will your comments from a former ford wayne indiana of mayor wayne richard. this is part of the broadband conference. it is 50 minutes. >> i am the on line community director of nextgen web. you can find us on our year social media channels, youtube, twitter, as well as our website -- www.nextgenweb.org. i am really excited to have made your grandma richard with us today. he is the former indiana -- graham richard with us today. he served two terms as mayor of

fort wayne, indiana, where he transformed the government into a customer-driven, economically thriving city. we will hear more about that. i want to give a little bit more about his background. in 2007, he was the indiana chamber of commerce on read as the government leader of the year -- honoree. he received national awards for his technology leadership, including the fiber to the home council's 2005 award. he was recognized of one of the top 25 by government technology magazine for his contributions to the government technological movement. i can go on and on with his accolades, but i want to point out that he is an author. i brought a copy of the book. it is called "performance is the best politics."

he has also recently been appointed by the brookings institute as a non resident senior fellow where he will be working on the metropolitan policy program. and just in may, 2010, received doctorate from honoaryrary indiana university. >> it is a pleasure to be here today to share information about broadband. >> we want to run this as a conversation, just like the social media community tends to run. we have a live audience. if you have a question, please throw your hands up. feel free to interrupt. same with the on-line community, folks that are joining us on our lives stream or on twitter can use the hash tag #ngw to ask a question. just to kick things off, a year

ago, fcc chairman asked three people to kickoff the first forum for the national broadband program. those three folks were -- and you, the two-term mayor of indiana. why do you they call you mayor"?'s broadband >> i was asked to make a presentation in a a rust belt city. fort wayne -- we are equidistance between indianapolis and detroit. as a rust belt city in 200, we were challenged with a recession -- in 2000, so one of the

initiatives we started as an end result of convening small business owners is the initiative of what if we could say that ford wayne had the very best broadband assets of any city in the country? how would that improved services? it watered and inspired -- the phrase d insprieired started it. and that particular period, 2000, the crime issue was important. economic issues did not have quite the impact because the recession was just starting. we convened a broadband summit. we found away to put out a request for proposals or round of wireless broadband to help our public safety professionals and be able to do more patrolling and less paperwork.

early on, this is commonplace now, we were able to connect an entrepreneur that bid on that contract to make available stations for that network. at that time, the infrastructure was not as well developed. that led us to the over the course of seven years, reduce our violent crime rate, but overall crime dropped to the lowest in 28 years. that was the beginning. after that, we began to look at education and health care. >> i love wired and inspired. once you got broadband your community, what did you do to make sure people were adopting broadband once they had access to it, particularly under-served residents such as seniors, low-

income, multicultural communities? >> a part of that was to make sure there was access at the early stage. we formed a collaborative effort among the schools, libraries, and the local university. we were able to build out a system, putting our -- our philosophy is beg, borrow, buy, build. working with incumbents and forming a good partnership. we eventually were able by 2005 to connect all of the schools, 55,000 students with a gigabyte system. we were eventually able to build about the system in fort wayne to create an application for high-speed broadband to take place. in that context, we created the mayor's initiative, a capital fund, we worked with our

innovations center at the indiana-purdue campus, we began to say, what if those in organizationsr-profit could use high-speed broadband applications? let me give you an example. we have a health care clinic that is and not profit, a dental clinic. it is a walk-in, always available clinic for people who do not have a doctor. they do not have an emergency room need, but they have care needs. by working with them, we designed a system, because of type 2 diabetics increases among the population that is verweight, and we have oan overweight population, and we were able to connect for

retinol diagnostics with retinol imaging camera to the surgeon's office. so if somebody came in and the volunteer doctor or nurse is there and they could take that retinal image, they could send that -- we have seven practices there in our city -- pro bonon we could-- poro bono, send those out. we created an "i" team, an innovation team. we asked them court made it out of the mayor's office to call upon not for profits and say, what can we do to help your organization improve its services? an example, an easy one to visualize -- many people in a community who we would consider senior citizens, low income

neighborhoods, do not adopt a broad band. they feel it is too costly. we created a program based upon all youth program. net literacy. we created as senior connect ogram. working at neighbor locations, churches, housing-supported projects, we created a program where high school students work with computers that are refurbished by our community college in the houses or neighborhood centers for senior citizens. the high school students to teach the seniors how to use the web and communicate with their relatives and friends and how to use resources they would not normally use in the community because they have not been on line before. >> that sounds like a good job

experience for students as well. benefit both sides. i know we also talked about the disability community. he mentioned that some hard of hearing applications you experience. >> one of the fastest-growing of disabilities of the note -- are those with hearing impairments. maybe those of baby boomers who listened to too much rock are in trouble. was of the things we did work with the allen county for the blind and disabled, using of broadband connection, envisioned that you cannot hear. you have to call a call center that may be located in utah, but you cannot hear, so you cannot sign. at that point, in 2004-2005-

2006, we have a connector to indianapolis where there was a non-hearing impaired person theyranslate what it was needed to talk to the computer repair center in utah. as individuals could communicate with their relatives and friends, the kind of light in their eyes and the smiles and their faces as broadband enhance their ability to work out of their homes, even though they're hearing impairment caused them to have communication challenges. that is already great example. i have another one. can i tell it? i get so excited. we know that educational attainment is one of the critical needs we have. in our school system, we have 32,000 students in the urban

almost 52,000, students. many of them can qualify for a program initiated by senator byaayh as governor, and it is called 21st century scholars. there are 90 languages in the fort wayne schools. there may not be anybody in the home that speaks english. you have a sixth grader that says i will stay off drugs, go to school regularly, make sure i not get in trouble with the law, and if they do that, they can become a 21st century scholar. there is applied to them that any indiana college or university, whether private like notre dame or public like indiana university, the state will pay, usually averaging $5,000 per year. we know and a lifetime of low- income student who gets a post- high school degree, particularly a four-year degree, their lifetime earnings will be more

than $1 million a more than someone who only has a high- school diploma. that gap is widening. so we created a program where 50 retired schoolteachers, some of them living in a nursing home, were e-mentoring those sixth grade 21st century scholars where sometimes there was no english spoken at home, to encourage them. it is like a big brother-big sister. you can do that over time and space. now we are expanding that to college students and their dormitories, so they can be big brothers and big sisters in a virtual timeframe. we think that will boost the opportunities for those young people to move to another level of economic opportunity. >> that is a fantastic case study and one i was not aware of. one of the themes i am hearing

is a collaboration. i know this is important to you. you said you went out into the non-profit communities that were actually serving the under- served, and you worked with local leaders and other mayors. i want to know what was the most important piece of advice you would give them? what really motivated these folks? >> those in leadership, whether elected or individuals that are thought leaders in the community or neighborhood leaders, for glee underestimate the power of convening -- underestimate the power of convening collaboration. we have a government not work that helps mayors and county executives, and one of the classes we are teaching is collaborative leadership- building skills. how do you build collaboration? i am in washington, i enjoy coming here, and i enjoy my work with brookings, but when you get

to a community like for wayne, collaboration blossoms. it is not active here. we have partisanship that is evident in every pore of the political veins and the sinew of the body politic, but until we get to a point where we have more collaboration, we will not win competitiveness or around the girl. broadband is a great connector. it helps people convene and innovate online in ways we could not have dreamed of. what we recommend is get p eople in the room who think about ways to solve a problem. in 2002, we said would not be interesting if every person who did not have a family doctor and no health insurance, had an electronic medical record? so all local foundation puts the money on the table. two competing hospitals, the

medical society and others came together and build a collaboration that led to what is called "no more clipboard." my to testify, we had over 90,000 electronic medical records for people who had no health insurance. that means when they go to an emergency room or neighborhood clinic you are not going to order all the same tests that had been ordered six months earlier at another location. it allows you to begin to use -- we talked about that senior citizen who is now online. he or she can now go and see their electronic medical records. they can get coached by health- care professionals at those clinics. they can take ownership and take charge of their own help the living style and their health

needs. all of this is about convene collect and collaborate. it is a way of building a new sense of community. we have seen an explosion with young people and with social media. the think you will see more applications that run on -- take wireless. we are seeing lte, 4g. 10 times faster wireless broadband. the potential for us to do great things -- decongestant part to your project we are working on -- i will get there. i really appreciate what you are saying in terms of collaboration and broadband powering collaboration, as well as these applications. it sounds like it has led to efficiencies on the government side as well as for people. i want to spend more time talking about these case studies

with your experience with broadband, and the applications changing the lives of people. i think going back to the fort wayne example of economic development how would broadband be used to create jobs? >> first of all, it is infrastructure which is vital to maintaining jobs. let me give you an example. this happened as a was coming here. i sat in the airport. i was making a presentation. he had a fast-growing appraisal business. he moved to indianapolis. he said, "i had availability broadband to keep up. now i do not. in my business, we have to download so much value -- such information to value the companies to assist it is critical for the growth of this business that now has seven employees."

again and again, we are finding people who choose to locate in a community on the basis of skilled workers and high speed broadband. raytheon corporation made an announcement and said, "we chose to add 200 more jobs in fort wayne because of the skilled work force and the mayor's broadband innovation initiative, where high-speed broadband is available. why? because many of our folks telecommute and what to do advanced on-line degree work. they need very high speed broadband to be able to do that. we can add these jobs in fort wayne because you have an infrastructure which we do not have in other plants like chicago, like indianapolis. increasingly, other communities

are building broadband. august attractive in 2007, they said that availability of high speed broadband was now in the top five of criteria, right behind a skilled worker. sometimes it was two. sometimes it was three. in 2000 it was not in the top 20. this is about creating economic wealth and making sure that the jobs of the future that depend on that innovation infrastructure are there. one last one. we are seeing that connectivity leads to innovation and collaboration. if we are going to radically double our exports as the president suggested, we are not going to get that done if we do not change the way we do business in communities like indiana.

broadband is another way to help do that. for example, when we put this collaboration together for creating a gigabit system at the schools this last year -- i am so excited about this. we are offering chinese, japanese, and arabic language skills for college course credit for any high school student. for school corporations covering 55,000 students. mayor daley is trying to educate with mandarin chinese 15,000 students a year in chicago. if we are going to be competitive, up broadband delivers -- this is a blended program. students will come for a couple of days on campus, but the rest is delivered by broadband. those intense language immersion experiences will help us be competitive in terms of having young people who will serve the needs of a local company and

start their own businesses in the global economy. >> it sounds like a cycle. you're having an increasingly educated work force that is more connected. that brings more jobs, larger companies interested in coming to your community. it sounds like a win all around. my next question had to do with the environment, but i am going to skip that because i like where you were going with education. in terms of distance learning, you said you are more connected to schools. how has that impacted test scores and things like that? >> let us take a major challenge that the president and congress have been talking about. that is post high-school educational attainment. educational attainment numbers for people who go to a community college in most communities is less than 30%. less than 30% get a certificate or degree. we have statewide community

colleges in our state. 130,000 students. we have a 40% loan request increase for most campuses because of that learning and learning equation. there is not enough parking space. there are not enough teachers. there is not enough classrooms base. this is a magnificent opportunity. we just had a meeting with the president of the system talking about how can you enable through broadband a radical enhancement of the ability of that single mom who knows that her high school education is not going to cut it for her kids. if she can use her high-speed broadband connections at 10:00 at night with new immersive video learning capability -- i read in the paper that an israeli american is offering a $6,000 h p supported competitor.

all of a sudden, we are in a time where massive innovation around educational attainment is possible using immersive, video- based online learning. there is a huge need. i think we are going to see that being one of the ways this country turns the corner and radically lifts the capability of millions and millions of our young people and adults who are finding they do not have the skills for the jobs of the future. >> i like saying learn and earn. i am sure that is a great motivator. it sounds like people are getting more and more connected purely for education. i want to go to the energy issue. it is something a lot of folks are thinking about. i know you are recently and member of the board for the clean economy network.

i want to talk about the ways you use broadband for energy savings. i know you have been active with a smart home program as well. >> everybody talks about smart grid. i like to talk about the smart enough grid, especially if you are a computer that happens to have fiber to the home. if you have very high bandwidth upstream and downstream, you have the ability to adjust a programmable thermostat to get 80% of the value of a smart grid even without smart meters. you cannot have smart infrastructure and the smart grid without the telecommunications infrastructure that enables that connection of communication to provide an that innovation that will save money. let us go back to that single mom. we had what we call our killer applications conference in 2007.

500 people came. remotely, we demonstrated from the convention center and a 95 year old home in the urban core of our city. we put cat5 all the way through it. we connected it. we could show a 15% to 30% decrease in the energy consumption cost for that single mom. think about that single mom. if she can see her latchkey kids as they come home, make sure they are doing their homework -- if she can remotely, from her desk as a secretary, turn off appliances, particularly if she gets signals that it is the most energy-efficient thing to do -- and if she can work so she does not have to drive -- you save on transportation energy and fossil energy.

you're putting money in your pocket that can be used for food, for education, for health- care, and for buying those things that were made -- that will make her family more self- sufficient. we are evaluating exactly what that sort of broadband-enabled -- this is not just about tree hugging, as much as i loved trees. they do help reduce energy consumption. but this is about creating value, saving money at a time when household budgets are so pinched. broadband enables that to happen. >> what about that the government level? i know we talked a lot about the carbon emissions savings when people are telecommuting -- the commerce and things like that. not the individual level cost savings, but are you seeing that

on the government level? >> absolutely. people do not like to think about it because it involves public safety and immediate cost savings. we will take my city again. imagine you are in fort wayne and there is a sarin gas attack or a tanker truck overturns, and for some reason the critical assets in your community are shut down. we have seen this with floods or tornadoes. we have seen circumstances were government comes to a halt. because of the connectivity of broadband to the water plant, the sewer plant, and fled gauging, you can remotely monitor and operate. this is machine-to-machine and human-to-machine dynamic to broadband community allows you

to do. if you are in washington, d.c., where we are, and there is unfortunately another terrorist attack, and it deals with a deadly gas, and the governor's of the three states, the president, and others say, "stay home." nobody goes to work anywhere. how are you going to operate the community? i submit it is the availability of high speed broadband -- cable, fiber-optic, and wireless -- that will keep the functioning elements of civil society going. we are going to be seeing applications large and small that help do this, applications like -- what if you could have a video, ip-based 911 system.

a man has a heart attack on your floor on thanksgiving day. what do you do? you could pick up the phone and call 911. you get your video camera. you get your hand-held device. you take a shot of that. you pop down to the 911 center. they can see. they can have their paramedic teams coming out who can anticipate response. the can even be given new instructions for what to do, remotely. a broadband-enabled city is going to be safer. look at these numbers. talk about efficiency. the research network says if the research network says if everyone w