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Flash Crash

‘Flash Crash’ anniversary leaves unanswered questions

Heidi Moore May 5, 2011
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Flash Crash

‘Flash Crash’ anniversary leaves unanswered questions

Heidi Moore May 5, 2011
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Heidi Moore: Well tomorrow is the one year anniversary of a Wall Street disaster — that we still don’t know the cause of. I’m talking about the so-called flash crash when the Dow dropped 600 points in five minutes. It recovered a few minutes later, but many investors lost a lot of money in the drop.

Here’s our New York bureau chief Heidi Moore.


Heidi Moore: After markets went into cardiac arrest during the flash crash last year, regulators took six months and 104 pages to diagnose the problem: a few computer trades that went haywire.

But there are still lots of questions, says Larry Tabb. His firm, Tabb Group, analyzes the stock markets.

Larry Tabb: Are we comfortable that that cannot happen in the future and is everything right with the markets going forward? And I think the answer is an equivocal: “Who knows?”

Regulators have put in place several rules to keep stocks from crashing to zero when something goes wrong. But some skeptics would say that’s like using Band-Aids to fix a heart attack.

Here’s Jamie Selway. He examines the markets for ITG.

Jamie Selway: There is more unknown out there than they’re used to. If you ask, do people feel confident, I don’t think you get many yeses.

Experts say the regulators’ Band-Aids have worked so far, but the market is really due for a full physical check-up.

In New York, I’m Heidi Moore for Marketplace.

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