Computers, Not Human Error, Likely Caused Market Meltdown
Computerized sell programs triggered by global events-rather than trader error or “fat finger”-appear to have caused Thursday’s unprecedented market swing, according market pros who are reconstructing the nearly 1,000-point stock selloff. These experts think the intensely accelerated electronic trading was sparked by the Greek debt crisis and other events and not a trader who typed a “b” for billion instead of “m” for million in executing a trade on Thursday.
Market sources say the confluence of events likely triggered electronic selling programs. As that selling commenced, the human element of the markets quickly evaporated and computerized trading programs wantonly sold stocks at whatever price was available, creating a feeding frenzy. “It wasn’t a fat finger,” said Dave Lutz, managing director of trading at Stifel Nicolaus in Baltimore. “The markets became unglued…Most of it was centered on the fact that currency markets affected the equity markets.” Not everyone is so sure. Authorities are probing the trading activity and looking to see whether a human mistake or manipulation was at play.
Comments are closed.