In derivative markets such as futures there are predefined price and volume limits (in the jargon 'limit up' and 'limit down' - ie: max up and down movements.) These limits exist primarily to prevent market manipulation or cornering a market (buying the entire supply of a commodity) but have also been triggered by trading around events such as the Japan earthquake. Doing a quick search it seems that there are plans to trial these controls on equity markets (http://blogs.law.harvard.edu/corpgov/2012/06/13/limit-up-lim...)

The problem here though was that while some stocks had dramatic price movements that might have triggered a limit control, more heavily traded stocks were able to absorb the additional volume and the price did not move significantly. Knight were not doing anything outside of normal bands, they were buying normal volumes of stocks close to the current market price and selling close to the current price. What they were doing was illogical in a profit sense because they were buying at a high price and selling at a lower price and thus immediately losing money. I think it would be very difficult for an exchange to trap this kind of problem.

In all the issue of determining 'normal' trading is very difficult as markets tend to be much noisier than you might expect. The majority of trading occurs near the open and closes of major markets (Hong Kong, London, New York) or data releases (eg US Unemployment) so large spikes in volume and price are a regular occurrence. In equities this is even more difficult as smaller stocks will tend to be more volatile and profit reporting season increases this volatility even further. Markets are ruled by fear and greed, and falsely triggering a limit may cause larger issues than it solves.