While liquidity plays a central role in the functioning of financial markets, it is volatility that can be truly damaging. Despite almost universal agreement among academics that HFT improves prices for investors and dampens stock market volatility, since May 6, 2010, the sector has been under close scrutiny by regulators . On a day described as the “Flash Crash,” the U.S. stock market experienced one of the most severe price declines in its history. Within five minutes, the Dow Jones industrial index fell 900 points, then recovered most of those losses in the next 15 minutes. Since then, this unprecedented and unexplained volatility has sparked public debate. In the aftermath of the American “flash crash”, regulators were quick to place the blame on HFT. Within a week, the chairman of the U.S. Securities and Exchange Commission determined that there was evidence that "professional liquidity providers" withdrew from the market when stocks began to fall, exacerbating the slide. Perhaps irrationally, policymakers, without any significant evidence, believe that HFTs withdraw from markets as soon as signs of stress appear, contributing to a sudden loss of liquidity and promoting volatility (Grant, 2011). Additionally, Andrew Haldane highlights the “flash crash” when he determines that the ever-increasing speed of trading amplifies volatility. In my opinion, in the aftermath of the financial crisis, when regulators received so much criticism, I think they feel they need to act immediately, even if they don't know the real problem. I consider this evident from calls for increased regulation of HFT by US Senator Charles Schumer, who bases his opinion on recent news reporting (Zerohedge. 2010), rather than academic or scientific research . ..ttp://blogs.wsj.com/marketbeat/2009/12/08/volcker-praises-the-atm-blasts-finance-execs-experts/. Last accessed 04/12/2011. Jones, R. (2010). Institutional investor: Flash Crash and CyberWar. Available: http://hftsecurityrisk.com/category/flash-crash-special/. Last accessed 04/12/2011. Pagnotta, E & Philippon, T. (2010). The welfare effects of financial innovation: High-frequency trading in stock markets. Available: https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=SED2011&paper_id=1246. Last accessed 04/12/2011. Mackenzie, M & Demos, T. (2011). Fears of a new “flash crash” persist. Available: http://www.ft.com/cms/s/0/d18f3d28-7735-11e0-aed6-00144feabdc0.html#axzz1fPJAVyJm. Last accessed 04/12/11. Geithner, T. (2007). Liquidity and financial markets. Available: http://www.newyorkfed.org/newsevents/speeches/2007/gei070228.html. Last access 05/12/11.