Trades Dumped on Exchanges Blamed for Intensifying May 6 Crash
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Brokerages overwhelmed by plunging prices on May 6 were forced to send sell orders from individuals to public exchanges instead of processing them internally, causing at least 50 percent of the canceled trades that day, according to U.S. regulators.
“Internalizers instead routed orders to the exchanges, putting further pressure on the liquidity that remained in those venues,” the Securities and Exchange Commission and Commodity Futures Trading Commission said in a report released Oct. 1 that detailed the causes of the rout. They did this because of selling pressure from retail customers, an unwillingness to trade and questions about the accuracy of market data given the speed of the decline, the document added.