One computer trade caused 'flash crash'

The "flash crash" which sent the US stock market down 9 per cent in 20 minutes on 6 May began in the futures market with a single computer-generated trade, according to a joint report by stock and derivatives market regulators last night.

Its conclusion was that the high-frequency traders who are supposed to provide liquidity to markets do not always fulfil that promise.

In a 15-second period, the report says, an equity market tracker called the E-Mini contract was pinged back and forth 27,000 times between high-frequency traders who did not want it on their books. The absence of real buyers caused the E-Mini, and the underlying shares whose value it reflected, to plunge and thousands of deals had to be cancelled.