Flash crash

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As Flash Crash, or in German also Flashcrash , several strong price drops (English crash ) on the financial markets that lasted only minutes were referred to. The sudden slump was followed by a similarly rapid recovery.

Flash crash from 2010

Crash and consequences

Dow Jones on May 6, 2010

On the afternoon of May 6, 2010, a leading index of the US stock markets , the S&P 500 , fell by almost 6 percent within 6 minutes, but recovered somewhat within 20 minutes. The Dow Jones Industrial Average Index temporarily even lost more than 9 percent; this corresponds to a loss of almost 1,000 points. Nearly 1.3 billion shares traded in 10 minutes, six times the average. Numerous stocks temporarily fell to a fraction of their original price in minutes, some by as much as 99 percent.

As a result of the incident, new rules for the US stock exchanges were decided in June 2010. Trading in stocks in the S&P index is suspended for five minutes if they have previously lost more than ten percent of their value in five minutes. In addition, the exchange regulator is considering restrictions on high-frequency trading . After the crash, all transactions on the Nasdaq exchange at prices below 50 percent of the previous day's value were declared invalid and reversed.

causes

The Commodity Futures Trading Commission and the United States Securities and Exchange Commission announced in a joint report in 2010 that a liquidity crisis had occurred when a single US trader traded 4.1 e-mini contracts in a hedge Billions of dollars only sold under computer control depending on the current trading volume.

Five years later there were increasing indications that market manipulation by a trader could have triggered the crash. The US law enforcement authorities began investigating a single day trader from a London suburb from April 2015 . Navinder Singh Sarao carried out fraudulent stock market manipulation in favor of his own high-frequency trading transactions. He is accused of having given numerous sales orders and then immediately canceled them again. The fraud consists in the automatic cancellation of the purchase orders by a computer program that canceled all purchase orders from the outset, which shows that there was no intention to buy. The purpose of canceling the buy orders was to cause the prices in question to fall, which the trader then used to his advantage. A year and a half after the investigation began, Navinder Singh Sarao confessed to the manipulation he was accused of. With various market manipulations, he is said to have earned $ 40 million within five years. Sarao was banned from trading on the stock exchange.

Flash crash from 2016

Flashcrash-2016.PNG

On October 7, 2016 at around 1 a.m. CEST , the British pound suddenly fell in the Asian currency markets . The pound fell by up to 10 percent against the US dollar in a matter of minutes . It recovered shortly afterwards, but remained about 1.5 percent in the red. This was preceded by a drop in the rate of the pound that lasted several months after the UK's decision to leave the EU (Brexit). The latest announcements of “tough” exit negotiations by British Prime Minister Theresa May had put an additional burden on the pound.

The Bank of England is investigating the incident.

Web links

Individual evidence

  1. ↑ 1000-point slide: The secret of the great stock market crash ( Memento of May 12, 2010 in the Internet Archive ) in Financial Times Germany of May 11, 2010
  2. ↑ US Securities and Exchange Commission stops panic sales in Spiegel Online from June 10, 2010
  3. ↑ SEC takes action against Blitztrader ( memento from September 10, 2010 in the Internet Archive ) in Financial Times Deutschland online from September 8, 2010
  4. ↑ handelsblatt.com: What caused the US stock market crash in May , October 1, 2010
  5. ↑ Findings Regarding the Market Events of May 6, 2010 (PDF; 7.9 MB), Report of the staffs of the CFTC and SEC to the Joint Advisory Committee on Emerging Regulatory Issues, September 30, 2010
  6. ↑ FAZ.net / Norbert Kuls April 22, 2015: Debacle for the supervision
  7. ↑ David Ingram: 'Flash crash' market manipulation case poses test for prosecutors. Daily Mail Online (Reuters), April 21, 2015, accessed April 22, 2015 .
  8. ↑ Dealer confesses manipulation in n-tv from November 10, 2016
  9. ↑ Liam Vaughan: How the Flash Crash Trader's $ 50 Million Fortune Vanished. In: Bloomberg.com. Bloomberg, February 10, 2017, accessed September 17, 2019 .
  10. ↑ a b Jill Treanor, Justin McCurry, Rob Davies: Bank of England investigating dramatic overnight fall in pound. In: The Guardian. October 7, 2016, accessed November 11, 2016 .
  11. ↑ "Flashcrash": Typo makes books crash , dpa report on Spiegel Online, October 7, 2016.
  12. ↑ "Flash Crash" tears the pound down ( memento from October 8, 2016 in the Internet Archive ) , tagesschau.de, October 7, 2016.