Financial Ethics: A Review of 2010 Flash Crash

Authors: Omer Farooq, Salman Ahmed Khan, Sadaf Khalid

Abstract:

Modern day stock markets have almost entirely became automated. Even though it means increased profits for the investors by algorithms acting upon the slightest price change in order of microseconds, it also has given birth to many ethical dilemmas in the sense that slightest mistake can cause people to lose all of their livelihoods. This paper reviews one such event that happened on May 06, 2010 in which $1 trillion dollars disappeared from the Dow Jones Industrial Average. We are going to discuss its various aspects and the ethical dilemmas that have arisen due to it.

Keywords: Flash Crash, Market Crash, Stock Market, Stock Market Crash.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1092948

References:

[1] Ethics, Finance, and Automation: A Preliminary Survey of Problems in High Frequency Trading Michael Davis, Andrew Kumiega, Ben Van Vliet: Springer Science+Business Media Dordrecht 2012.
[2] Findings regarding the market events of May 6, 2010 U.S. Commodity Futures Trading Commission, U.S. Securities & Exchange Commission.
[3] http://en.wikipedia.org/wiki/2010_Flash_Crash.
[4] http://en.wikipedia.org/wiki/E-mini_S%26P.
[5] http://www.cimaglobal.com/Documents/Professional%20ethics%20docs/dilemmas%20FINAL.pdf
[6] http://citation.allacademic.com/meta/p_mla_apa_research_citation/2/3/1/5/2/pages231528/p231528-13.php
[7] http://www.moneymanagement.com.au/analysis/investment/2012/why-ethical-investment-is-no-longer-a-hypothetical