Notable examples
Examples of recent substantial market disruptions include the following:
- On May 6, 2010, the Dow Jones Industrial Average declined about 1,000 points (about 9 percent) and recovered those losses within minutes. It was the second-largest point swing (1,010.14 points) and the largest one-day point decline (998.5 points) on an intraday basis in the history of the Dow Jones Industrial Average. This market disruption became known as the Flash Crash and resulted in U.S. regulators issuing new regulations to control market access achieved through automated trading.
- On August 1, 2012 between 9:30 a.m. and 10:00 a.m. EDT, Knight Capital Group lost four times its 2011 net income.Knight's CEO Thomas Joyce stated, on the day after the market disruption, that the firm had "all hands on deck" to fix a bug in one of Knight's trading algorithms that submitted erroneous orders to exchanges for nearly 150 different stocks. Trading volumes soared in so many issues, that the SPDR S&P 500 ETF (SYMBOL: SPY), which is generally the most heavily-traded U.S. security became the 52nd-most traded stock on that day, according to Eric Hunsader, CEO of market data service Nanex. Knight shares closed down 62 percent as a result of the trading error and Knight Capital nearly collapsed. Knight ultimately reached an agreement to merge with Getco, a Chicago-based high-speed trading firm.
