The 2010 Flash Crash: Call Me Old-Fashioned…

The 2010 Flash Crash: Call Me Old-Fashioned… by Mathew Harrison, Burgundy Asset Management

Navinder Singh Sarao, a U.K. high-frequency trader, was arrested recently for using market manipulation to destabilize the market causing the May 6, 2010 Flash Crash where, among other markets, the Dow Jones Industrial Average lost 9% within minutes only to recover shortly thereafter. On that afternoon, Mr. Sarao placed thousands of trades that he had no intention of executing. By placing the trades and later cancelling them, he was attempting to manipulate the market through spoofing tactics designed to give him an indication of the very short-term direction of the market so he could profit from this knowledge.

Call me old-fashioned, but aren’t stock markets supposed...