flash crash

Examples of flash crashes that have occurred:

• May 6, 2010, flash crash
• April 23, 2013, flash crash
• Frankenshock,{{Cite web|url=https://www.ft.com/content/3b4f6c14-9c9a-11e4-971b-00144feabdc0|title=Pound's plunge joins growing list of 'flash crashes'|date=7 October 2016|website=Financial Times|access-date=27 October 2017}} or Flash Crash Swiss Franc on January 15, 2015{{Cite news|url=https://www.businessinsider.com/switzerlands-central-bank-lost-51-billion-and-the-franc-crashed-04-2015-7|title=Switzerland's central bank lost $51 billion and the franc is getting hammered|work=Business Insider|access-date=2017-10-30}}
• Flash Crash of the British Pound on October 6, 2016{{Cite news|url=https://www.theguardian.com/business/2016/oct/07/what-caused-pound-flash-crash-brexit-fallen-sterling|title=What caused the pound's flash crash?|last=Davies|first=Rob|date=2016-10-07|work=The Guardian|access-date=2017-10-30|issn=0261-3077}}
• Flash Crash of Japanese Yen on January 2, 2019{{Cite web|url=https://www.forexlive.com/news/!/three-things-caused-the-flash-crash-in-forex-market-20190102|title=Three things caused the flash crash in forex market|website=ForexLive|access-date=2019-01-03}}{{Cite web|url=https://www.forexlive.com/news/!/currencies-flash-crash-recap-where-are-we-now-20190103|title=Currencies flash crash recap: Where are we now?|website=ForexLive|access-date=2019-01-03}}
• Flash Crash of European Stock Markets on May 2, 2022.{{Cite news|url=https://financialpost.com/pmn/business-pmn/nordic-stocks-hit-by-flash-crash-broker-says|title=Nordic stocks hit by flash crash, broker says|website=Financial Post|date=2 May 2022 |access-date=2022-05-02}}{{Cite web|url=https://www.reuters.com/business/brief-crash-hits-european-stocks-holiday-thinned-trading-2022-05-02/|title=Brief crash hits European stocks in holiday-thinned trading|website=Reuters|access-date=2022-05-02}}

{{Main|2010 flash crash}}

This type of event occurred on May 6, 2010 in the United States. A $4.1 billion trade on the New York Stock Exchange (NYSE) resulted in a loss to the Dow Jones Industrial Average of over 1,000 points and then a rise to approximately previous value, all over about fifteen minutes. The mechanism causing the event has been heavily researched and is in dispute. On April 21, 2015, the U.S. Department of Justice laid "22 criminal counts, including fraud and market manipulation" against Navinder Singh Sarao, a trader. Among the charges included was the use of spoofing algorithms.{{Cite news|url=https://www.bloomberg.com/news/articles/2015-04-22/mystery-trader-armed-with-algorithms-rewrites-flash-crash-story|title=How a Mystery Trader With an Algorithm May Have Caused the Flash Crash|date=2015-04-22|newspaper=Bloomberg.com|access-date=2017-02-08}}

On June 22, 2017, the price of Ethereum, the second-largest digital cryptocurrency, dropped from more than $300 to as low as $0.10 in minutes at GDAX exchange. Suspected for market manipulation or an account takeover at first, later investigation by GDAX claimed no indication of wrongdoing. The crash was triggered by a multimillion-dollar selling order which brought the price down, from $317.81 to $224.48, and caused the following flood of 800 stop-loss and margin funding liquidation orders, crashing the market.{{cite news |url=https://www.cnbc.com/2017/06/22/ethereum-price-crash-10-cents-gdax-exchange-after-multimillion-dollar-trade.html |title=Ethereum briefly crashed from $319 to 10 cents in seconds on one exchange after 'multimillion dollar' trade |last=Kharpal|first=Arjun |date=22 June 2017 |work=CNBC |access-date= 24 June 2017 }}

On October 7, 2016, there was a flash crash in the value of sterling, which dropped more than 6% in two minutes against the US dollar. It was the pound's lowest level against the dollar since May 1985. The pound recovered much of its value in the next few minutes, but ended down on the day's trading, most likely due to market concerns about the impact of a "hard Brexit"—a more complete break with the European Union following Britain's 'Leave' referendum vote in June. It was initially speculated that the flash crash may have been due to a fat-finger trader error or an algorithm reacting to negative news articles about the British Government's European policy.{{cite news|url=https://www.ft.com/content/dfb375be-8c23-11e6-8cb7-e7ada1d123b1|title=Pound struggles to recover after plunging 6% in 2 minutes|date=7 October 2016|newspaper=Financial Times}}

On January 2, 2019, a flash crash was seen in the value of the United States dollar (USD) vs the Japanese yen (JPY) and the Australian dollar (AUD) vs USD, which dropped more than 4% in a few minutes. It was the USD lowest level against the yen and AUD against USD since March 2009. The USD-JPY and AUD-USD recovered much of their value in the next few minutes. It was speculated that the flash crash may have been due to Apple Inc. reporting reduced sales forecast in China but this seems unlikely as the report came out an hour before the actual crash.{{cite news|url=https://www.ft.com/content/45d3807a-0f5b-11e9-a3aa-118c761d2745|title=Yen flash crash: what happened and why|date=3 January 2018|newspaper=Financial Times}} The lows reported on USD-JPY also varied with Reuters reporting a low of 104.90 on USD-JPY while FXMarketAPI reported a low of 104.45.{{cite news|url=https://fxmarketapi.com|title=FXMarketAPI|publisher=FXMarketAPI}}

On May 2, 2022, from 9:56 to 10:01 CET the Swedish OMXS30 index dropped 6.8%, the Norwegian OBX 4.1%,{{Cite web |title=OBX Total Return Index (OBX.OL) Charts, Data & News - Yahoo Finance |url=https://finance.yahoo.com/quote/OBX.OL/ |access-date=2022-05-02 |website=finance.yahoo.com |language=en-US}} the Danish OMXC25 -6.7% and the Finnish OMXH25 -7.5%.{{Cite web |title=OMX Helsinki 25 (^OMXH25) Charts, Data & News - Yahoo Finance |url=https://finance.yahoo.com/quote/%5EOMXH25/ |access-date=2022-05-02 |website=finance.yahoo.com |language=en-US}} Other European indices dropped too, although not as severely as the Nordic exchanges. The German DAX dropped 1.6%{{Cite web |title=DAX PERFORMANCE-INDEX (^GDAXI) Charts, Data & News - Yahoo Finance |url=https://finance.yahoo.com/quote/%5EGDAXI/ |access-date=2022-05-02 |website=finance.yahoo.com |language=en-US}} and the European STOXX 600 2.2%.{{Cite web |title=STXE 600 PR.EUR (^STOXX) Charts, Data & News - Yahoo Finance |url=https://finance.yahoo.com/quote/%5ESTOXX/ |access-date=2022-05-02 |website=finance.yahoo.com |language=en-US}} At their lowest point around €300bn or $315bn had been erased from the markets.{{Cite news |date=2022-05-02 |title=Citi Says Trader Made Error Behind Flash Crash in Europe Stocks |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2022-05-02/citi-s-london-trading-desk-behind-rare-european-flash-crash |access-date=2022-05-03}} The indices quickly rebounded to levels at or slightly below what it was before the crash. A spokesperson for Nasdaq said the crash was not because of internal server errors or hacker attacks. Nasdaq stated that trades done during the crash would not be cancelled on the exchanges that it operates.{{Cite web |last=Axelsson |first=Martin Rex•Jonathan |date=2022-05-02 |title=Nasdaqs besked efter börskraschen: Inga avslut kommer makuleras |url=https://www.di.se/nyheter/nasdaqs-besked-efter-borskraschen-inga-avslut-kommer-makuleras/ |access-date=2022-05-02 |website=Dagens industri |language=sv}} There were rumors that Citigroup had accidentally sold a large basket of European stocks over the market.{{Cite web |last=Rex |first=Jonathan Axelsson•Martin |date=2022-05-02 |title=Extremt hack i börskurvan på Stockholmsbörsen |url=https://www.di.se/live/extremt-hack-i-borskurvan-pa-stockholmsborsen/ |access-date=2022-05-02 |website=Dagens industri |language=sv}} Later in the afternoon Nasdaq confirmed that the flash crash was due to a very large accidental sell order by a market participant, a so-called fat-finger error. Nasdaq would not comment which market participant it was.{{Cite news |first1=Erik |last1=Wikén |first2=Lucas |last2=De Vivo |date=2022-05-02 |title=Plötsligt jätteras på Stockholmsbörsen |language=sv |work=SVT Nyheter |url=https://www.svt.se/nyheter/ekonomi/skramselhicka-pa-borsen-plotsligt-jatteras |access-date=2022-05-02}} Later in the day Citigroup admitted that the crash was caused by "an error when inputting a transaction" by one of its traders at their London trading desk.{{Cite news |date=2022-05-02 |title=Citi Says Trader Made Error Behind Flash Crash in Europe Stocks |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2022-05-02/citi-s-london-trading-desk-behind-rare-european-flash-crash |access-date=2022-05-03}}

In October 2013, a flash crash occurred on the Singapore Exchange which wiped out $6.9 billion in capitalization and saw some stocks lose up to 87 percent of their value. The crash resulted in new regulations being announced in August 2014. Minimum trading prices of 0.20 cents per share would be introduced, short positions would be required to be reported, and a 5 percent collateral levy implemented. The exchange said the measures were to curb excessive speculation and potential share price manipulation.{{cite news|title=Singapore Exchange regulators change rules following crash|url=http://www.singaporenews.net/index.php/sid/224382417/scat/a677a0718b69db72/ht/Singapore-Exchange-regulators-change-rules-following-crash|access-date=2 August 2014|publisher=Singapore News.Net|archive-url=https://web.archive.org/web/20140808053833/http://www.singaporenews.net/index.php/sid/224382417/scat/a677a0718b69db72/ht/Singapore-Exchange-regulators-change-rules-following-crash|archive-date=8 August 2014|url-status=dead}}

Two short-lived (less than a second) movements (more than 1%) in several (40 and 88) stock prices followed by recovery were reported for November 25, 2014.{{cite web|publisher=MarketWatch|title=Two mini-flash crashes rock stock market Tuesday|

url=http://www.marketwatch.com/story/two-mini-flash-crashes-rock-stock-market-2014-11-25?dist=tcountdown|

access-date=25 November 2014}}

Events described as flash crashes typically exhibit a rapid partial or total price rebound.{{Cite web |title=What Is a Flash Crash? |url=https://www.investopedia.com/terms/f/flash-crash.asp |access-date=2022-05-09 |website=Investopedia |language=en}} Conversely, rapid price falls in response to adverse news (e.g. disappointing earnings announcements) which do not rapidly revert are simply crashes or, colloquially, falling knives.{{Cite web |title=What Is a Falling Knife? |url=https://www.investopedia.com/terms/f/fallingknife.asp |access-date=2022-05-09 |website=Investopedia |language=en}}

• Stock market crash
• Fat-finger error
• Kennedy Slide of 1962

{{Reflist}}

• {{youTube|86g4_w4j3jU|FLASH CRASH! Dow Jones drops 560 points in 4 Minutes! May 6th 2010}}
• {{youTube|SOLNJoLR5Mg|Flash Crash: Can Only One Trader Be Responsible?}}
• {{youTube|H84IcDaIATQ|Alleged Flash Crash Trader's Former Employer Speaks Out}}
• [https://www.ft.com/content/3ea69aec-1772-11ea-8d73-6303645ac406 Aftershocks and Fragility: Ten Years in Financial Markets] - [https://www.ft.com Financial Times]
• [https://www.barrons.com/articles/the-flash-crash-was-five-years-ago-tomorrow-could-it-happen-again-51598197215 The Stock Market Was Rocked by a Mysterious ‘Flash Crash’ Five Years Ago. What You Need to Know] - Barron's

{{Financial crises}}

Category:Economic crises

Category:Financial markets