flash crash

Why We Could Easily Have Another Flash Crash

It's been a great year for stocks, which could make some grow complacent. But before you run with the bulls, be warned: Our markets aren'€™t safe from another flash crash.

Algorithms Gone Wild: 3 Cases of Computers We Trusted Too Much

Computer programs can sometimes be better at spotting trends or dealing with consumers' intricate demands than human employees. But what happens when an algorithm fails? Putting too much authority into the virtual hands of a program can -- and has -- led to some epic fails.

Why High-Speed Trading Is Still a Huge Flash Crash Threat

On May 6, 2010, the Dow suddenly dropped 600 points and then just as quickly recovered, and high-frequency trading became a new economic bogeyman. But then, without its dangers being addressed, HFT slipped back into the shadows. Now, an upcoming report from the Commodity Futures Trading Commission may finally change all that.

SEC Requires Uniform System for U.S. Stock Exchanges

U.S. stock exchanges and markets must establish a uniform system for tracking all orders and trades under an SEC rule approved Wednesday. The change should make it easier for the government to investigate market disruptions like the 2010 Flash Crash.

Lower Volatility Might Not Signal a Market Correction

The CBOE's Volatility Index, also known as the VIX, has been trending lower, which many analysts consider a sign that that stocks are due for a fall. But another argument says it's all relative, and in today's environment it may suggest a continuing rally.

ETFs in 2010: The Winners, the Losers and the Warnings

The investment world's love affair with all things ETF did not wane in 2010, as their share of the market rose to $940 billion. But popular doesn't mean easy, and it doesn't always mean profitable. Along with the best and the worst performers, a few reminders about how to use these popular investment vehicles safely.

Flash Crash Panel to Discuss Reforms with SEC, CFTC

The May 6 "flash crash" is still somewhat of an enigma, but an advisory panel meeting on Friday to review a report into it could at least help regulators establish some new market rules to prevent similar crashes from occurring in the future, Reuters reports.

SEC: No More 'Naked' Access to Stock Market for Traders

Traders will no longer be able to make direct trades without broker supervision. As part of a series of changes after May's "flash crash," the U.S. Securities and Exchange Commission decided Wednesday to bar traders from having "naked" access to stock markets.

Wealthy Investors Are Diving Into Gold by the Ton

The very rich have begun to hedge what they see as a dangerous financial world by buying gold -- in some cases literally by the ton. Recent reports show that several banks have begun advising their wealthiest individual clients put as much as 10% of their assets into the precious metal.

Report: Flash Crash Triggered by Algorithm

Federal regulators said Friday an algorithm caused the notorious Flash Crash of May 6 when an automated trading system selling futures contracts on the S&P 500 ($INX) triggered a cascade of selling throughout the broader market.

How Can We Prevent Another Flash Crash?

The official report on last May's 'flash crash' will claim that a single trade caused the financial fiasco, though not all observers will agree. Whatever the cause, the big question is how another crash can be avoided. According to Keith Saxton, Global Director of Financial Markets at IBM, "What we've learned is that the regulators don't have the same tools as the people playing the market. We have to tool up the regulators and supervisors to see what's actually going on in near real time."

Another Suspect in the Flash Crash: 'Quote Stuffing'

Quote stuffing is just another way high-speed traders make a few cents by exploiting small price differences between the exchange where a trader buys and the one where he sells using huge orders that are immediately canceled. Such a ploy gone awry could be the culprit.

ETFs at Midyear: Investments Keep Pouring In

The first half of 2010 has been anything but dull for exchange-traded fund investors. ETF assets in the U.S. decreased 0.4% to $772 billion as of June 30, but that actually indicates a serious inflow of cash: Equity markets, as measured by the S&P 500, fell 8.9% during the period.

Cisco Shares Halted As Circuit Breaker Kicks In

Trading in Cisco Systems shares was briefly halted in late morning trading Thursday, as the shares soared 10% within a few minutes, triggering the market's SEC-mandated cooling-off circuit breakers.

Circuit Breakers Let Cooler Heads Prevail

Why do circuit-breakers on stocks make sense? A simple manual cross-check of prices can help mitigate volatility "if things get out of whack," says Doreen Mogavero, CEO of Mogavero Lee & Co., in a video interview from the floor of the NYSE.

What's Fueling Stocks' Late-Day Price Swings?

More and more evidence points to high-frequency traders, who could now account for some 50% to 70% of all trades. And some have rules against carrying open positions after the close of trading. Time for a speed limit?

ETF Lessons From the May 6 Flash Crash

The Flash Crash of May 6 was a day of reckoning of sorts for investors in exchange-traded funds. ETFs didn't cause the meltdown, but they were certainly among its victims.