Automatic trading programs staged Armageddon on the stock exchange
The US Congress is holding hearings trying to find the causes of the panic that swept the US stock market on May 6 from 14.42 to 15.02 local time. The results of the deals have already been canceled, and the creation of a special working group of scientists and specialists has begun, which should find at least some explanation of what happened during the fateful 20 minutes.
In the process of the largest fall in the history of trading, the market lost about $ 1 trillion. Shares of some blue chips lost almost 100% of their value. For example, iShares Russell 1000 Value Index Fund shares fell from $ 59 to $ 0.08, while tobacco manufacturer Philip Morris fell by 90%.
By 15.02 the market won back the situation and everything returned to normal. “Everything happened so fast, as if the torpedo had flown by. It was hell, ”Vedomosti cites the words of Scott Redler, senior strategist at T3 Capital Management.
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Obviously, one of the reasons is triggering triggers in automated trading systems. It turns out that this “financial hell” was arranged by computers, but what exactly triggered the chain reaction of the programs was the question.
The results of the auction have officially been canceled, which caused sincere regret for those traders who in a few minutes earned billions quite easily. True, some still lucky. The NYSE and NASDAQ canceled not all transactions, but only those in which the selling price is 60% or more different from the price of shares as of a few minutes before the start of the panic. That is, if you close by 59%, then you will be left earned, but super-profits will be taken away. This is a fairer decision than to completely cancel all transactions from 14.42 to 15.02.
During the week of the congressional hearings, the reasons for the panic did not become clear. Therefore, the Securities Commission together with the Commission on stock trading announced the creation of a joint group, which will include scientists, market participants and former regulators. They should find an explanation to avoid repeating such scenarios in the future.
Because if automatic trading develops, then in the future someone will buy all American corporations at 1 cent per share in a few seconds, and then try to cancel the results of the auctions.
In the process of the largest fall in the history of trading, the market lost about $ 1 trillion. Shares of some blue chips lost almost 100% of their value. For example, iShares Russell 1000 Value Index Fund shares fell from $ 59 to $ 0.08, while tobacco manufacturer Philip Morris fell by 90%.
By 15.02 the market won back the situation and everything returned to normal. “Everything happened so fast, as if the torpedo had flown by. It was hell, ”Vedomosti cites the words of Scott Redler, senior strategist at T3 Capital Management.
')
Obviously, one of the reasons is triggering triggers in automated trading systems. It turns out that this “financial hell” was arranged by computers, but what exactly triggered the chain reaction of the programs was the question.
The results of the auction have officially been canceled, which caused sincere regret for those traders who in a few minutes earned billions quite easily. True, some still lucky. The NYSE and NASDAQ canceled not all transactions, but only those in which the selling price is 60% or more different from the price of shares as of a few minutes before the start of the panic. That is, if you close by 59%, then you will be left earned, but super-profits will be taken away. This is a fairer decision than to completely cancel all transactions from 14.42 to 15.02.
During the week of the congressional hearings, the reasons for the panic did not become clear. Therefore, the Securities Commission together with the Commission on stock trading announced the creation of a joint group, which will include scientists, market participants and former regulators. They should find an explanation to avoid repeating such scenarios in the future.
Because if automatic trading develops, then in the future someone will buy all American corporations at 1 cent per share in a few seconds, and then try to cancel the results of the auctions.
Source: https://habr.com/ru/post/93490/
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