Flashing a warning

7 May 2010 By Rolfe Winkler

U.S. equity markets are among the most scrutinized anywhere, yet a day after a stomachchurning bungee jump in prices there’s still more fingerpointing than explanation. The episode raises crucial questions about superfast trading, exchanges and market structures in general.

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U.S. stocks on May 6 fell as much as 9 percent during frantic intraday action before recovering and closing with all three major indexes down more than 3 percent. The market benchmarks lost further ground on May 7, trading down around 2 percent near the end of the day.

Pursuant to a rule allowing clearly erroneous trades to be canceled, the Nasdaq Stock Market, along with NYSE Euronext's ARCA market, plans to cancel trades on a wide list of stocks that occurred in a brief window after 2.40 p.m. Eastern time on May 6.

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