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5:00Anatomy of a Flash Crash
At 2:32pm on 6 May 2010 the US stock market began to fall. Twenty minutes later the Dow had swung roughly 1,000 points, shares of blue-chip firms had printed at a penny and at $100,000, and then almost all of it reversed. No news caused it. The plumbing did.
A flash crash is not a panic about value, it is a failure of market microstructure: liquidity evaporating faster than prices can find buyers. On 6 May 2010 the Dow Jones Industrial Average fell about 998 points (~9%) and recovered most of it inside roughly twenty minutes, the steepest intraday point swing in its history at the time. The joint SEC/CFTC report found no single villain, but a chain of automated systems interacting in a way no human had designed.
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