GRAPH: The Dow Jones Industrials plummeted 700 points in 20 minutes, only to regain 600 points in the following 20 minutes on Thursday. The chart does not display one candle but NYSE Euronext said there was no fast market. Click to enlarge. Chart courtesy of Yahoo.Speculation about the reason for this biggest ultra short-term move ranged far and wide.
First losses before the 700-point nosedive were attributed to live broadcasts from escalating protests in Athens, but this changed rapidly with the gigantic drop.
CNBC was full of dropping faces and pushed a version of a trader error. Screen flashes citing sources claimed Citibank was behind erroneous trades, which was denied by the bank immediately.
Twitter was rife with speculation that the intra-day crash was caused by a 15 billion mini S&P futures mistrade while others blamed High Frequency Trading (HFT).
If there were erroneous trades the responsible bank could face claims of tens of billions of dollars that were lost with stop-loss limits triggered by the 10% downleg.
The biggest drop ever happened after 2:30 PM local time when circuit breakers are not applied anymore.