Fears linger of new Stock Market ‘flash crash’

In the space of just 20 minutes a year ago on Friday, Wall Street tumbled hundreds of points, dumbfounding dealers, only to rebound sharply. The extraordinary gyration in stocks, dubbed the “flash crash”, stunned investors and revealed gaping holes in the equity market’s structure.

Such a chronic breakdown in the operation of the world’s largest stock market sparked an investigation by regulators, scrutiny from Washington and a flurry of new rules.

Yet one year later, unease lingers that in spite of new safeguards, stock prices are vulnerable to bouts of sudden selling. For all the talk and action, the big concern remains that the Dow could suffer a repeat of last May’s crash.

“We will have another flash crash, yes without question,” says James Angel, associate professor of finance at Georgetown university. “The combination of human nature, markets and technology means that at some point, something will misfire.” (read more)