Was the Flash Crash Rigged?
- Thread starter Cdntrader
- Start date
" his data show that on April 28, similar high-speed activity caused an ultra-mini flash crash in stocks like Procter & Gamble and Wal-Mart, which fell 50 cents and then fully recovered in just two secondsâmore than enough time for a high-frequency trader to short the stocks, buy in at the low and then sell when they again traded with a normal bid-ask spread of a cent."
If they can do it in small steps, why would they tip their hands and do it in a huge step and possibly alert others? That would give away their existence and edge, make a possible lawsuit or regulation likely....
If they can do it in small steps, why would they tip their hands and do it in a huge step and possibly alert others? That would give away their existence and edge, make a possible lawsuit or regulation likely....
So, if I am Mary Shapiro i'm gonna want to talk to this Hunsader guy. Maybe it's nonsense, maybe not, but it would be remiss not to follow up. It shouldn't take a rocket scientist to get to the bottom of the flash crash. And there have been several reasonable explanations floated about. So let's hope the SEC is paying attention, and doing what we pay them to do.. So the SEC is up against, as usual, Mr. Greed. And it may be that those sweet little exchanges are just going to have to forgo this additional juicy income from the HFT boys and girls.
"Rigged" implies the players that caused the market crash had a collective goal to raise risk premiums, and in fact had short longer term exposures.
If it was a "screw-up" that these players showed their hand to everyone in an obvious way, the markets by definition were not rigged, as it would have been to their best longer term interests to let the free money parade continue indefinitely.
I think it is likely the markets HAVE been rigged, and the flash crash was the beginning of the end of that trade... the writing is now on the wall, and there will be marginally less and less money to be made with such approaches going forward.
If it was a "screw-up" that these players showed their hand to everyone in an obvious way, the markets by definition were not rigged, as it would have been to their best longer term interests to let the free money parade continue indefinitely.
I think it is likely the markets HAVE been rigged, and the flash crash was the beginning of the end of that trade... the writing is now on the wall, and there will be marginally less and less money to be made with such approaches going forward.