10 Trading Glitches That Stopped The Markets
1. The Infamous Flash CrashIt 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.