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Flash crash one year on: flaws still exposed

By 6 May, 2011June 6th, 2017News

Financial News

One year on,¬†Michelle Price reflects on the ‘Flash Crash’ of May 6th 2010 ¬†– the biggest one-day point decline on an intraday basis of US blue-chip companies, reportedly exasperated by an over-sized order that was sent into the market mistakenly.

The article goes on to explore how the Crash exposed serious flaws in the complex and fragmented US equities market, and brought the spotlight to the European markets, as the debate around the fragility of these markets spread. A year on from the Flash Crash, many commentators and market participants are concerned that very little has been changed, with much of the problems remaining.

The European Commission’s review of the Markets in Financial Instruments Directive (Mifid) attempted to address these concerns by proposing that trading firms register their algorithms with the relevant national authority. According to GreySpark, much of the emphasis on algorithms is more for show, with the practice being pulled out as a scapegoat.

The debate also moves on to look at the exchange controls (or lack thereof) that existed, and the tick sizes of each trading venue.

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