Wall Street’s 5 Biggest Tech Fails
The Flash Crash, May 6, 2010
In a span of about 20 dizzying minutes, the U.S. equity markets plunged nearly 700 points before quickly recovering following an errant, computer-driven trade worth $4.1 billion. The transaction, which was orchestrated by a lone Waddell & Reed trader, highlighted just how fast liquidity can evaporate from a market that’s dominated by high-frequency trading. The incident also set off a firestorm of negative publicity for the industry and led to a series of reforms, including the implementation of marketwide circuit breakers, bans on “stub quotes” by market makers, and bans on the practice of brokers giving their clients “naked” access to exchanges without any pre-trade supervision.
[What's Changed Since the Flash Crash?]