Flash Crash


DEFINITION of 'Flash Crash'

The quick drop and recovery in securities prices that occurred shortly after 2:30pm Eastern Standard Time on May 6, 2010. Initial reports that the crash was caused by a mistyped order proved to be erroneous, and the causes of the flash crash remain unknown. Both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have investigated the incident.


The SEC and CFTC released a preliminary report on the flash crash incident on May 18, 2010. The report gave several working hypotheses, but failed to identify a single cause for the incident. Securities exchanges canceled 21,000 trades that were executed at unexpectedly low prices during the crash. On June 10, 2010, the SEC voted unanimously to enact new rules which automatically stop trading for any stock in the S&P 500 whose price changes by more than 10% in any five-minute period.

  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices.
  2. Quote Stuffing

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  3. Stub Quote

    Order placed well off a stock's market price. Stub quotes are ...
  4. Stock Market Crash Of 1929

    A severe downturn in equity prices that occurred in October of ...
  5. Stock Market Crash Of 1987

    A rapid and severe downturn in stock prices that occurred in ...
  6. Circuit Breaker

    Refers to any of the measures used by stock exchanges during ...
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