Regulators Find No 'Fat Finger' Errors in Market Drop
The SEC and the Commodity Futures Trading Commission said a preliminary review showed that there were no "fat finger" errors, computer hacking, or terrorist activity involved in the May 6 market drop.
Still, the agencies acknowledged "we cannot completely rule out these possibilities" in a joint report released May 18. Going forward, the agencies said they will come up with a structural framework that aims to strengthen circuit breakers and handle erroneous trades.
The regulators are looking at six possible reasons for the drops including if there was a link between the decline in the prices of exchange traded funds and the simultaneous selling of individual securities.
Starting May 10, SEC staff was set to be on site at all major markets to monitor trading conditions. The Financial Industry Regulatory Authority has also established an open phone line to facilitate immediate communications among the markets if issues arise.
On May 6, there were over 17 million trades between 2:00 p.m. and 3:00 p.m. and the markets processed 10.3 billion shares in New York Stock Exchange stocks alone that day, the regulators said. As quickly as the market dropped, it suddenly and dramatically reversed itself, recovering 543 points in approximately a minute and a half, to 10,415.65.