Wall Street’s Flash Crash over AP Tweet Hoax Eyed
(NEW YORK) -- A weird thing happened to the stock market last week and now, financial regulators want to know if something much worse could cause a crash in the future.
Someone hacked the Associated Press' Twitter account on April 23 and tweeted that President Obama had been injured in an explosion at the White House. Seconds later, the Dow Jones index -- which had been up during the day -- plunged 136 points.
The market recovered minutes later but, The New York Times reports, “the episode has heightened concern among regulators about the combination of social media and high-frequency trading.”
The newspaper says the Commodity Futures Trading Commission has scheduled a public meeting this week with high-frequency traders "to discuss whether there should be additional safeguards to protect against the effects of social media on markets."
In recent years, the volume of high frequency trades, triggered by algorithms, has rapidly expanded and could be a source of dangerous instability in financial markets.
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