medium · Market Microstructure mmf-core

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)?

1. A widespread failure of the NYSE specialist system to fulfill its affirmative obligation to maintain a fair and continuously orderly market throughout that day.
2. A coordinated short squeeze by retail investors that overwhelmed institutional liquidity providers across every major U.S. exchange that day.
3. Direct price manipulation orchestrated by a single trader using layered spoofing orders that drove the S&P 500 futures market sharply lower that afternoon.
4. 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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