"We" (the group of people represented by the government) do not control the algorithms, so we can't easily and without many other side effects force that to happen. We do (indirectly) control the stock exchange rules, so we can put systems like this in place that limit the damage done to us when it does happen.

Heh, yeah but it's an adversarial problem. Do you assume the other bots are going to "do the right thing" and not intensify the panic? Maybe not. Maybe you just act on immediate information and try to optimize your position for the next few milliseconds.