One thing that is universally true about the financial markets worldwide is that they are set up for the large institutional traders to benefit. Often this benefit is at the detriment of the individual investor or retail trader. Such an example happened on Friday, October 5th when a trader supposedly made a mistake when entering an order for an institutional client. The error lead to what is being called a “flash crash” that pushed the Nifty down 900 points in mere seconds. This was not a typical “flash crash.” A “flash crash” occurs when there is a large drop in the prices of securities and also the indexes usually due to an algorithmic trading program functioning improperly. In this case, the error was human caused, not computerized.
Emkay Global, the broker believed to be the cause of the crash has reportedly lost 51 crore due to the erroneous trading. The ANMI (Association of National Exchanges Members of India) may ask brokers who benefitted from the trades to unwind those bad trades and return the lost shares… Continue Reading
