USA TODAY: A massive computer-driven sell program initiated by a mutual fund company was the trigger for the May 6 stock market “flash crash” that sent the Dow tumbling almost 600 points in a matter of minutes and has left a lasting scar on Main Street investors, federal regulators say.
A report issued Friday by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) sheds some new light on what caused the market mayhem that day, a trading session that started out turbulent as fears surrounding the European debt crisis roiled global markets…
1. Massive sell program is activated. At 2:32 p.m. ET, at a time when the market was already volatile, an unidentified mutual fund company put in a computer sell program of 75,000 E-Mini contracts — these are futures contracts tied to the Standard & Poor’s 500 index that allow traders to bet on the direction of the index. The trade was valued at $4.1 billion. Only two trades of equal or bigger size have occurred in the past 12 months, and both were executed by the same unidentified fund company.
2. Trade execution is totally automated. .. (more) and (actual report)
