Financial catchphrase of the year

There were a lot of great additions to the English language in 2010. Sarah Palin gave us “refudiate”. The BP oil spill in the Gulf of Mexico gave us several new entries, including “top kill” and “junk shot”.

But the catchphrase of the year in financial circles was missed by many in the year-end lists: Flash Crash.

On May 6, 2010, the major North American stock markets plunged inexplicably; the Dow dropped 1,000 points in a matter of seconds.

Who was to blame? Some trader with “fat fingers”? Electronic trading systems run amok? Unsophisticated use of stop-loss orders? The short answer is “Yes”. So regulators set about preventing its recurrence.

Advisor.ca covered the fall-out:

No single cause for ‘flash crash’: IIROC

ETFs crashed by flash

Market chatter rises, complaints decline: IIROC

The limits of liquidity

Flash crash spurs single stock circuit-breakers

Can a flash crash happen again?