Algorithms Probably Caused a Flash Crash of the British Pound

Overnight, the British pound dropped by 6 percent, to $1.13. Analysts are pointing the finger at an increasingly familiar financial scapegoat: the algorithm. Though the crash hasn’t yet been definitively linked to algorithmic trading, the Economist argues that the speed of last night’s drop points at software gone haywire. (MIT Technology Review) read more


What the ETF Industry Has Done Since the Mini Flash Crash

As the market approaches the one-year anniversary of the August 24 sell-off, exchange traded fund providers and market exchanges have come together to outline new rules for more orderly early morning trades to avoid another mini flash crash. (NASDAQ)


A Better Theory on the Flash Crash?

In the original telling of the Flash Crash, which many astute critics viewed as poorly documented fiction, an unidentified mutual fund company (later named in press reports as Waddell & Reed) was blamed for setting things off with a massive sell order of Standard & Poor’s 500 E-mini futures. Now along comes the 36-year-old Londoner and high-frequency trader Navinder Singh Sarao. The CFTC and the Justice Department claim Sarao made $40 million from 2009 to this year by programing his trading robots to illegally manipulate the E-mini market. (Barrons)