The threat of cyber attacks are the real worry about last week’s market meltdown.

Last week in the span of just a few minutes the stock market fell by almost 1000 points.  This breathtaking bungee jump is still being investigated but the most likely public explanation is that a trading mistake was compounded exponentially by the automatic trading programs used on the Street.

Forbes published a subsequent story providing more detail on the matter and a useful discussion of circuit breakers that could have stopped this freefall until “humans” had time to intervene.[1]

I am certainly no expert on financial market operations.  If I was I would not have such a big hole in my own portfolio I am slowly climbing out of as the markets recover from recession.

But I do know—or rather believe that the US financial markets seem unreasonably vulnerable to cyber attacks that could trigger the same freefall repeatedly unless the market has some rules and circuit breaking programs to prevent it.

This incident may be a trading mistake but it is also a HUGE wake-up call that this situation needs immediate attention to plug this security leak.


[1] http://www.forbes.com/2010/05/07/dow-plunge-market-glitch-opinions-contributors-james-angel.html?boxes=opinionschannellighttop

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s