From reading the SEC and CFTC’s 79-page report on the flash crash of May 6, when the Dow Jones dropped almost 1,000 points in 15 minutes, it becomes clear that neither of the regulators has an explanation. One thing is for sure though, says Joe Saluzzi, co-head of US equity trading firm Themis Trading: "It will happen again." He’s not alone in his opinion.
The possibility that it was the error of a fat-fingered trader, or an erroneous algorithm, now seems to have been ruled out, which leads to the conclusion that the structure of the market is broken, says Saluzzi. "There was nothing particular about that day. It is simply how the market is now. There are major structural issues and the foundation isn’t solid."
What Saluzzi is implying is what many are now asking, the SEC included – are there simply...
