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The Race to Zero

In: The Global Macro Economy and Finance

Author

Listed:
  • Andrew G. Haldane

    (Bank of England)

Abstract

Stock prices can go down as well as up. Never in financial history has this adage been more apt than on 6 May 2010. Then, the so-called ‘Flash Crash’ sent shock-waves through global equity markets. The Dow Jones experienced its largest ever intraday point fall, losing $1 trillion of market value in the space of half an hour. History is full of such fat-tailed falls in stocks. Was this just another to add to the list, perhaps compressed into a smaller time window?

Suggested Citation

  • Andrew G. Haldane, 2012. "The Race to Zero," International Economic Association Series, in: Franklin Allen & Masahiko Aoki & Jean-Paul Fitoussi & Nobuhiro Kiyotaki & Roger Gordon & Joseph E. S (ed.), The Global Macro Economy and Finance, chapter 13, pages 245-270, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-137-03425-0_14
    DOI: 10.1057/9781137034250_14
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    Citations

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    Cited by:

    1. Oliver Linton & Soheil Mahmoodzadeh, 2018. "Implications of High-Frequency Trading for Security Markets," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 237-259, August.
    2. Benos, Evangelos & Sagade, Satchit, 2016. "Price discovery and the cross-section of high-frequency trading," Journal of Financial Markets, Elsevier, vol. 30(C), pages 54-77.
    3. Mengyu Zhang & Thanos Verousis & Iordanis Kalaitzoglou, 2022. "Information and the arrival rate of option trading volume," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(4), pages 605-644, April.
    4. Andrea Roncella & Ignacio Ferrero, 2022. "The Ethics of Financial Market Making and Its Implications for High-Frequency Trading," Journal of Business Ethics, Springer, vol. 181(1), pages 139-151, November.
    5. Bizzozero, Paolo & Flepp, Raphael & Franck, Egon, 2018. "The effect of fast trading on price discovery and efficiency: Evidence from a betting exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 156(C), pages 126-143.
    6. Tobias Braun & Jonas A Fiegen & Daniel C Wagner & Sebastian M Krause & Thomas Guhr, 2018. "Impact and recovery process of mini flash crashes: An empirical study," PLOS ONE, Public Library of Science, vol. 13(5), pages 1-11, May.
    7. Tobias Braun & Jonas A. Fiegen & Daniel C. Wagner & Sebastian M. Krause & Thomas Guhr, 2017. "Impact and Recovery Process of Mini Flash Crashes: An Empirical Study," Papers 1707.05580, arXiv.org.
    8. Arumugam, Devika & Krishna Prasanna, P., 2021. "Commonality and contrarian trading among algorithmic traders," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    9. Daniel Fricke & Austin Gerig, 2018. "Too fast or too slow? Determining the optimal speed of financial markets," Quantitative Finance, Taylor & Francis Journals, vol. 18(4), pages 519-532, April.

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