The role of ETFs in the US market "flash crash" on 6 May is under scrutiny following a preliminary report suggesting ETFs and index futures were linked to the event.
The report issued by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) suggests the drop in prices of index-tracking ETFs and E-mini S&P 500 futures, coupled with subsequent sales in individual securities, could have perpetuated the extreme market fluctuations. The "flash crash", which saw the Dow Jones plummet around 9.2%, occurred between 2.30pm and 3pm New York time on 6 May. The joint SEC and CFTC report says ETFs accounted for around 70% of the US-listed securities with declines of 60% or more away from the 2.40pm transaction prices....
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