2010 Flash Crash

As Flash Crash a burglary (English Crash ) of the U.S. equity markets on 6 May 2010 is referred to, in which the stock market collapsed violently within minutes and recovered just as quickly.

On the afternoon of 6 May, a leading index of the U.S., the S & P 500 sank within 6 minutes by almost 6 percent, but could within 20 minutes again to recover somewhat. The Dow Jones Industrial Average index lost at times even more than 9 percent; this corresponds to a loss of almost 1,000 points. Within 10 minutes were nearly 1.3 billion shares traded, six times the average. Many stocks fell temporarily within minutes to a fraction of their original price, some by up to 99 percent.

Because of the incident, new rules for the U.S. stock markets were adopted in June 2010. This suspension of trading in shares of the S & P index for five minutes if they have previously lost in five minutes by more than ten percent of its value. In addition, the Securities and Exchange Commission is considering restrictions on high-frequency trading. On the Nasdaq stock market after the crash, all transactions have been declared and rescinded at rates below 50 percent from the previous day value invalid.

Causes

A possible cause is a concatenation of circumstances was discussed:

  • Tip errors of a stockbroker by several orders of magnitude (so-called Fat Finger Trade )
  • Similar to the October 1987 crash ( " Black Monday " ), that is triggered by an avalanche of sell orders through computerized trading programs, which sell a stock once it falls below a predetermined course
  • Suspension of trading in important alternative trading systems due to strong exchange rate differences, and thus no longer functioning market.

The Commodity Futures Trading Commission and the United States Securities and Exchange Commission came in a joint report to the conclusion that there had been a liquidity crisis than any single dealer as part of hedging e- mini contracts worth 4.1 billion dollars. computerized only dependent on the current trading volume have sold.

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