Neither high-frequency traders nor “dark pools” of professionals who match trades without displaying quotes to the public triggered the May 6 flash crash. During the chaos, some two billion shares traded, with total volume exceeding $56 billion.
More than 300 stocks and exchange-traded funds moved more than 60% away from their most-recent prices, and trades were executed at absurd prices — as low as penny or less in some instances and as high as $100,000 in others. The trades were so preposterous that exchanges canceled more than 20,000 of them. The good news is that recent actions and a handful of new proposals already aim to restore more order to the market.
The Securities and Exchange Commission has proposed rules that would prohibit broker-dealers from giving professional, electronic-trading customers direct access to the markets, a practice that allows them to buy and sell without placing orders through an intermediary.