On Sunday, 60 Minutes did a piece on speed trading — the use of supercomputers to conduct high frequency trading — and its impact on the financial markets. CTNewsJunkie’s Doug Hardy and SMC Financial Editor Brian Parker discuss the 60 Minutes story, and what happened during the “flash crash” of May 6.
At 2:42 p.m. on May 6 with the Dow Jones down more than 300 points for the day, the equity markets dropped more than 600 points in 5 minutes, causing a panic. By 3:07 p.m. the markets had regained most of the 600-point drop.
According to SMC Financial Editor Brian Parker, if you were investor and lost more than 60 percent of your equity, both the bid and ask side of that trade were later canceled. However, if you lost anything less than 60 percent, you were out of luck. Federal regulators have yet to provide an explanation as to the exact cause of what is now known as the “flash crash,” nor have they provided an explanation as to why trading wasn’t suspended during the anomaly.
However, today’s 60 Minutes story may have shined a little light on what regulators are up against.
Related:
Read & Watch: CBS/60 Minutes: How Speed Traders Are Changing Wall Street
