Flash Crash and an Indian Connection!

Tata CLiQ      Myntra     Tanishq

 Flash Crash and an Indian Connection!

The May 6, 2010, flash crash, also known as the crash of 2:45 or simply the flash crash, was a United States trillion-dollar flash crash (stock market crash) which started at 2:32 p.m. EDT and lasted for approximately 36 minutes.....

On May 6, 2010, U.S. stock markets opened and the Dow was down, and it trended that way for most of the day on worries about the debt crisis in Greece. At 2:42 p.m., with the Dow down more than 300 points for the day, the equity market began to fall rapidly, dropping an additional 600 points in 5 minutes for a loss of nearly 1,000 points for the day by 2:47 p.m. Twenty minutes later, by 3:07 p.m., the market had regained most of the 600-point drop.  

Croma      Kama Ayurveda      WOW

At the time of the flash crash, in May 2010, high-frequency traders were taking advantage of the unintended consequences of the consolidation of the U.S. financial regulations into Regulation NMS, designed to modernize and strengthen the United States National Market System for equity securities. The Reg NMS, promulgated and described by the United States Securities and Exchange Commission, was intended to assure that investors received the best price executions for their orders by encouraging competition in the marketplace, creating attractive new opportunities for high-frequency-traders. Activities such as spoofing, layering, and front running were banned by 2015. This rule was designed to give investors the best possible price when dealing in stocks, even if that price was not on the exchange that received the order.

On May 6, 2010, almost $1 trillion disappeared from the US stock market, with the market rebounding in under 30 minutes. What led to flash crash, the fastest drop in market history?

It was the UK's general election day, and Wall Street was gripped by mounting anxiety about the Greek debt crisis as the Euro was falling against the dollar and the yen. Despite such turbulence during the trading day, no one had expected what followed next. The US stock market started plummeting, wiping out almost $1 trillion of market value. Hundreds of billions of dollars were wiped from the share prices of household name companies like Procter & Gamble (P&G) and General Electric.

Frenzy followed. The massive plunge did not last long. The share prices returned to their pre-crash levels by around 3 PM, eventually closing 3% lower. Notably, in just 20 minutes, 2 billion shares worth $56 billion had changed hands.

The official report of the investigation by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) outlined a hot potato effect, when people spend money faster, trying to get rid of it like a hot potato. After 5 years after the incident, the US Department of Justice charged Indian-origin British financial trader Navindra Singh Sarao with 22 criminal courts, including fraud and market manipulation, with a maximum sentence of 380 years.

Who is Sarao and how did he make the market turbulent from 4,000 miles away? A genius in math and a prodigy who played with the stock market like a computer, Sarao left his job in 2008 to trade independently. He’s estimated to have made a profit of $40 million from the confines of his bedroom at his parents’ house in Hounslow. He developed a software that placed thousands of stock orders before quickly cancelling or changing them, which created an artificial demand for other traders to buy or sell that asset.

Flipkart      Adidas      MediBuddy

This practice of spoofing allowed him to genuinely buy or sell orders at a profit in the volatile market later. In Jan 2020, the now 42-year-old autistic trader was spared imprisonment and sentenced to one-year home confinement based on his co-operation and crimes unmotivated by greed. Depending on whom you ask, Sarao was a scrounge, a symbol of a financial system run horribly amok, or a folk hero – an outsider who took on the tyranny of Wall Street and the high frequency traders.

On April 21, 2015, nearly five years after the incident, the U.S. The Department of Justice laid 22 criminal counts, including fraud and market manipulation, against Navinder Singh Sarao, a British Indian financial trader. Among the charges included was the use of spoofing algorithms; just prior to the flash crash, he placed orders for thousands of E-mini S&P 500 stock index futures contracts, which he planned on canceling later. These orders, amounting to about $200 million worth of bets that the market would fall, were replaced or modified 19,000 times before they were canceled. Spoofing, layering, and front running are now banned.

durex      Axis Bank      fabindia

Also read:

The Buddha smiled again!

Why India is Incredible India?

It’s getting harder for Pakistan

MyPost:

Isro's Chandrayaan-3 can script history after crash of Luna-25

If Chandrayaan-3's Vikram lander lands on the South Pole of the Moon on August 23, Isro will become the first space agency to do so. A proud moment for India.

On Sunday, Russia's space agency Roscosmos announced that its first lunar mission in 47 years, Luna-25, has crashed on the Moon's surface. For India, the news was of much importance because now, if Chandrayaan-3 accomplishes what it is expected to, it will be a major milestone for the Indian Space Research Organisation (ISRO). The world will be forced to take a new look at India in cost-effective space technology.

If Chandrayaan-3's Vikram lander lands on the South Pole of the Moon, the Indian Space Research Organisation (ISRO) will become the first space agency to do so. Over the last week, Chandrayaan-3 was in a race with Luna-25 to land on the far side of the Moon. Reports had suggested that Luna-25 would be able to make the landing before Chandrayaan-3. It would have made Russia the first country to land on the South Pole of the Moon.

But now that Luna-25 has crashed, the title is for India to take. All eyes are on India. When is Chandrayaan-3 likely to land? Hours after the crash of Luna-25 was announced, ISRO officially announced the landing date and time of Chandrayaan-3. It said that the lander module with the rover in its belly is expected to touch down on the surface of the Moon around 6:04 pm on August 23. On August 17, 35 days after the mission was launched on July 14, the lander module of Chandrayaan-3 had successfully separated from the propulsion module.

Nykaa      Beardo      Caffeine

...................................................................................................

Picture:

Shree Padmanabaswamy Temple, Kerala, India

...................................................................................................

To book an ad or an announcement on this blog.

WhatsApp: 91 9969154602 Email: akn929@yahoo.com

...................................................................................................

*Your comments are welcome. We value them, to make the blog better.

*Guest writers are welcome. Tell us about the subject. Get in touch.

*Please share this blog with your friends.

...................................................................................................

Recommended viewing:

Anil Naik - YouTube Channel

Youtube.com/@anilnaik-mypost

Please like, comment and Subscribe. 

...................................................................................................

Aneela Nike Post

Anil Naik

WhatsApp: 91 9969154602
Email: akn929@yahoo.com

 

...................................................................................................

If you feel that Aneela Nike Post is making a difference to your life, do take a minute to consider a comment or contribution. We would also value your suggestions as how to make ourselves more relevant to you. Please write to akn929@yahoo.com to give your valuable feedback.

 Emirates       goibibo      Clovia