Demystification Committee

Flash

May 6, 2010. Against a backdrop of a hung UK parliament, the result of an indecisive General Election, and of street riots in Athens, a consequence of the approval of EU-backed austerity measures aimed at preventing Greece’s default on loan payments, a flash crash inexplicably wipes a trillion dollars from stock markets on the other side of the globe.

Flash is a live reenactment of the stock market crash of May 6, 2010 executed 8 years after the original event. In Flash, New York and Chicago Stock Exchange trading data from May 6, 2010, and wireless network data collected 8 years later from the London trading location where the crash originated, are translated into sound by means of custom software.

As events unfolded on May 6, 2010, and for years after, commentators failingly searched for a meaningful narrative. Half a decade later, a trader was arrested in London and extradited to the US to be prosecuted for market manipulation. Trading with software from their home WiFi and PC, the trader was accused of inflating the financial market to profit from its chaos, causing the fastest crash in trading history.

The trader capitalised on the echo and volatility of a market rich with the noise of global events, dominated by algorithms and imbued with confirmation bias. The trader used a customised piece of trading software, hacked to enable a trading tactic known as spoofing: the altering of the perceived supply-and-demand of a commodity on the stock market, thus affecting its perceived value.

The software quickly placed, modified and cancelled thousands of sell and buy orders on a commodity. As the algorithms of institutional investors responded to the artificial demand for the commodity by altering their own offering, its price changed rapidly. The software would then execute a portion of those original orders at an earlier, advantageous price, and cancel the rest. Given the interconnected nature of commodities traded on the global financial system and the recursive algorithmic trading activity triggered by the hacked software, the financial market overloaded, crashed and re-booted in a few minutes, loosing a trillion dollars in the process.

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