Algorithmic trading causes US financial markets "flash crash"
A trader using a modified trading algorithm manipulated US financial markets, causing a trillion dollar crash and significant market volatility. UK trader Navinder Singh Saroa allegedly modified a common trading algorithm to generate large sell orders, pushing down prices, which he then canceled to buy at the lower market prices. The impact was immediate and severe, with the overall market dropping by 6 percent, and approximately USD 1 trillion in paper stocks lost within 36 minutes. H undreds of billions of dollars were wiped off the share prices of household name companies like Proctor & Gamble and General Electric, and caused a significant loss of confidence among investors, even if most stocks recovered within a few days. The incident was seen to highlight the vulnerability of financial markets to sudden shocks, and the ease with which they could be manipulated using basic algorithms. The also incident raised questions about the role of algorithmic trading in modern markets, and led to increased scrutiny of algorithmic trading practices and their potential to destabilise markets . System 🤖 Operator: Navinder Singh Saroa Developer: Country: USA Sector: Banking/financial services Purpose: Defraud Technology: Tra ding algorithm; Machine learning Issue: Accountability; Fra ud; Transparency
- Date it happened
- 2010-05-01
- Organisation involved
- Navinder Singh Saroa
This incident was imported from AIAAIC and is used under CC BY-SA 4.0. Our additions to it — the structured fields, the translation, the checks against other reports — are published under the same licence.
This is a record of what was reported, not a finding that anyone broke the law. If it names your organisation and you believe it is wrong, the corrections process is free and open to everyone.