hard · Market Microstructure
During the May 6, 2010, Flash Crash, what microstructure phenomenon primarily caused the extreme price declines in individual equities like Accenture (which traded at $0.01)?
- A widespread failure of the NYSE specialist system to fulfill its affirmative obligation to maintain a fair and orderly market.
- A coordinated short squeeze by retail investors that overwhelmed institutional liquidity providers.
- Direct price manipulation by a single trader using spoofing tactics to drive the S&P 500 futures lower.
- A 'hot potato' effect where HFT firms rapidly passed contracts to each other, creating a false impression of volume that misled execution algorithms.
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