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Becca Lipman
Becca Lipman
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10 Trading Glitches That Stopped The Markets

From flash crashes to naughty squirrels, here are 10 notable exchange snafus that have crippled the stock market. 
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1. The Infamous Flash Crash

It was May 6, 2010 at 2:42pm ET. Traders were deeply concerned about the Greek debt crisis (some things never change), the Gulf oil spill, and the sweeping impacts of approved regulatory changes. Then, they had the scare of their life.

In 20 minutes almost $1 trillion in market value disappeared and the Dow Jones Industrial Average plunged nearly 1,000 points. Bellwether stocks were reduced to pennies and investors began frantically selling at a loss. Then, just as quickly, at 3:07pm, the market recovered.

Fingers quickly pointed to electronic, or algorithmic, trading as the cause of the “Flash Crash” but a preliminary report issued May 18 by a joint committee of the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) determined that there was no evidence of trader error.

Regardless of the cause, it was clear the systems behind the market were fragile and flawed. And while this prompted many new rules and controls, as we go through this slideshow of trading glitches we have to wonder if all that much has changed. The market continues to become more complex, and the problems that plague it seem to keep pace.

 

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

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Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
8/28/2013 | 12:14:25 PM
re: 10 Trading Glitches That Stopped The Markets
Although Waddell & Reed has been blamed for the flash crash by the SEC, many still doubt the official report, instead saying the HFT algos suddenly withdrew liquidity from the market. Is the SEC correct? It's hard to tell.

Read:
http://www.bloomberg.com/news/...

http://www.nanex.net/aqck2/415...
Matthew (Matt)C433
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Matthew (Matt)C433,
User Rank: Apprentice
8/27/2013 | 3:54:11 PM
re: 10 Trading Glitches That Stopped The Markets
The CFTC knows who caused the crash. It was Waddell & Reed trading 74 million contracts of the S&P e-Mini on the CME that trigger the event in the equity markets. I am sure the SEC left this as an honest mistake and are more concerned with the breakers and technology gaps.
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