11. The Aftermath

Guest Chapter by R.T. Leuchtkafer

SEC and CFTC staff issued a final report on the Flash Crash to the Joint Committee on September 30, 2010.1 The report began, “On May 6, 2010, the prices of many U.S.-based equity products experienced an extraordinarily rapid decline and recovery” and said that many of the 8,000 stocks traded in the stock market dropped 5%, 10%, or even 15% or more before recovering, and how “Over 20,000 trades across more than 300 securities were executed at prices more than 60% away from their values just moments before. Moreover, many of these trades were executed at prices of a penny or less, or as high as $100,000, before prices of those securities returned to their ‘pre-crash’ levels.” In 104 pages of careful ...

Get Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.