The financial world and the economy can sometimes be similar to a roller coaster, it has its ups and downs. There have been many historical incidents where economic crises and turbulence have been recorded. These incidents can significantly disrupt the economy or may simply pass by as a small fluctuation. In 2010, a slightly more recent economic disturbance, the flash crash had occurred. The flash crash was a period where there were rapid collapses in stocks, but fortunately it was also recovered. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay This incident occurred on May 6 at approximately 2:30 pm Eastern Standard Time. The flash crash was one of the largest single-day points of decline in the history of the Dow Jones Industrial Average. The major market makers present in the stock market had stopped automatically taking the other side of everyone's trades, so this made the market illiquid. Sell ​​orders received no immediate offers for a few minutes. Initial reports had claimed that the crash was the result of an erroneous order that turned out to be incorrect, but the causes of the flash crash remained unknown, although both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC ) had investigated the situation. The Dow Jones Industrial Average had already fallen 4% and continued to plummet 6% in such a short period of time. Literally minutes. Despite the rapid recovery, the index still closed around 350 points lower. The price of about 8,000 stocks and exchange-traded funds fell, followed by a recovery. Most stocks fell about 15% before recovering later that day. It not only affected the US markets, but it also affected the European markets. These European markets began to follow suit as the UK, French and German markets collapsed. A bit of history before this event occurred is that stocks were monitored by “specialists” who worked on the trading floors of stock exchanges. These specialists were tasked with keeping up with the market and making sure it was in good order. This would temporarily shift the other sides of the trades as unmatched buy or sell orders came in. The government was not particularly fond of these specialists. They were constantly accused of defrauding investors. Politicians tried to do everything possible to replace these specialists with computers. This resulted in much of the liquidity in the market coming from high-frequency trading computers. These computers were capable of making transactions at the speed of light. To make money, they placed a large volume of trades at low prices and did so often. Both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) had released a report on this incident and the report had given some theories and hypotheses as to why the flash crash might have occurred, but these hypotheses were not you were able to identify a specific reason for what had caused the accident. During the crash, the SEC had canceled about 21,000 trades because they were made at unexpectedly low prices. On June 10, the SEC voted to establish new rules that would automatically halt trading in any S&P 500 stock whose price changed by more than 10% in a five-minute period. the failure is due to the arrival of well-informed traders on the market, which can make the work of these computers difficult. 2015.