Mergers loom as “flash crash” back in spotlight

The merger frenzy among the world’s top exchanges could cast the U.S.-centric “flash crash” debate in a global light, as experts on Friday pitch some possibly radical changes meant to avoid another market breakdown.

A special committee is set to meet in Washington to make its long-awaited recommendations to regulators — now more than nine months since the unprecedented market crash sent the Dow Jones industrial average down some 700 points before rebounding, all in a matter of minutes.

The May 6 crash rattled investors, exposed flaws in the structure of today’s electronic markets, and set regulators on a mission to fix the high-speed system.

The exchanges at the center of the breakdown, however, added a new wrinkle to the debate when in the last week they set off a new wave of planned global mergers, including the takeover of Big Board parent NYSE Euronext (NYX.N) by Germany‘s Deutsche Boerse (DB1Gn.DE).

While the deals could strengthen the oversight of cross-border trading and boost the flow of global liquidity, they also tie the world’s interconnected markets tighter together, possibly setting the stage for larger-scale crashes, some observers said.

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