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 ...

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