Citi: Maybe Flash Crashes Aren’t So Bad, After All
Big moves in markets don't necessarily disrupt the economy
Here's a pic of one famous flash crash.
Photographer: Jin Lee/BloombergThis article is for subscribers only.
Flash crashes—those days when stocks, bonds, and currencies all make big, sudden moves in tandem—may roil financial markets, but they don’t seem to make a big difference to the real economy, according to Citigroup.
Analyst Steven Englander built a working definition of what qualifies as a flash crash, then went about analyzing what the impact of all that frenzied trading was. His conclusion: not much.