1 trader triggered market crashSFlb

Associated Press

WASHINGTON

A trading firm’s use of a computer sell order triggered the May 6 market plunge, which sent the Dow Jones industrial average careening nearly 1,000 points in less than a half-hour, federal regulators said Friday.

A report by the Securities and Exchange Commission and the Commodity Futures Trading Commission determined that the so-called “flash crash” occurred when the trading firm executed a computerized selling program in an already stressed market.

The firm’s trade, worth $4.1 billion, led to a chain of events that ended with market players swiftly pulling their money from the stock market, the report said.

The report does not name the trading firm. But only one trade that day fit the description in the report. The firm Waddell & Reed, based in Overland Park, Kan., has acknowledged making such a trade that day.

The free-fall highlighted the complexity and perils of the fast-evolving securities markets. Electronic trading platforms now compete with the traditional exchanges. Stocks are traded on about 50 exchanges beyond the New York Stock Exchange and the Nasdaq Stock Market. Computers using mathematical formulas give so-called “high frequency” traders a split-second edge. Electronic errors at high speeds can ripple through markets.