The Securities and Exchange Commission has yet to unearth a single factor that precipitated the May 6 “flash crash,” which sent the Dow Jones Industrial Average spiraling down 700 points in minutes, seriously freaking out market participants.
Reuters reports that the SEC’s investigation will point to previously established factors like “stub quotes,” other unconventional and potentially illegal practices. Stub quotes are orders that are considerably different from the going market price of a stock or other security. “Quote stuffing,” a previously mooted explanation for the market’s extraordinary May 6 moves, “will not be fingered as one of the causes of the crash,” Reuters says. Quote stuffing is the practice of placing an extraordinarily high volume of orders and then canceling them immediately.
A new SEC report on the crash should be out in several weeks.