Financial Times (October 4)
The Securities and Exchange Commission (SEC) released its findings on the May 6 Flash Crash when the Dow Jones Industrial Average dropped 1,000 points before bouncing back…all in a breathtaking 20 minutes. The cause was an institutional investor’s $4.1 billion sale of so-called “e-mini” futures contracts to hedge against an equity position. The trade appears to have been legitimate. The SEC must take action to ensure legitimate trades don’t result in excess volatility that scares investors away from stock markets. Measures should include circuit breakers and regulation of high-frequency traders, including requirements that they serve as market makers.
Tags: Circuit breakers, Dow Jones, Flash crash, SEC, Traders
New York Times (May 7)
At 2:42 yesterday, the Dow Jones Industrial Average (DJIA) went into freefall. By 2:47, the DJIA recorded its greatest ever intraday point drop. Individual stocks experienced even greater volatility. Procter & Gamble fell 37%. Accenture dropped from $40 to $0.01. The New York Times says the panic was the result of “one part nervous traders, one part Greek crisis and one part trader error.” After falling more than 1,000 points, the DJIA largely recovered, closing down 347.80 points. The SEC and major stock exchanges have launched an investigation into the “unusual trading activity.”
At 2:42 yesterday, the Dow Jones Industrial Average (DJIA) went into freefall. By 2:47, the DJIA recorded its greatest ever intraday point drop. Individual stocks experienced even greater volatility. Procter & Gamble fell 37%. Accenture dropped from $40 to $0.01. The New York Times says the panic was the result of “one part nervous traders, one part Greek crisis and one part trader error.” After falling more than 1,000 points, the DJIA largely recovered, closing down 347.80 points. The SEC and major stock exchanges have launched an investigation into the “unusual trading activity.”
Tags: Dow Jones, Greek crisis, Panic trading, SEC
