SEC's Schapiro Hints at 'Flash Crash' Reforms

But by the end of the month, the SEC plans to release its findings and perhaps more reforms. This is according to a speech from the Chairman of the agency, Mary Schapiro.

She thinks that high-frequency traders will need some type of restrictions. While they provide liquidity to the markets, they can also create undue volatility. To deal with this, Schapiro has offered the possibility of having a quote be available for a minimum amount of time. Ultimately, this will foil the strategies of high-frequency traders since they operate in milliseconds.

Another idea is to prohibit stub quotes. Essentially, these are prices -- in other markets -- that have large gaps from the national markets.

For investors, these reforms are definitely important. If high-speed trading leads to unnecessary swings in prices, then it really serves no purpose. Rather, it only creates more fear and distrust in the markets. In light of all this, it seems inevitable that the SEC will take serious shots at high-frequency trading.

Tom Taulli is also the author of several books, including the Complete M&A Handbook as well as the upcoming book, All About Short Selling.