Three hundred milliseconds - so much time we need to blink, the satellite to fly three kilometers, and the stock price to fall from $ 10 to $ 0.0001 and go back.
Unlike large-scale exchange fluctuations, such lightning-fast mini-jumps involving shares of one particular company occur on the exchange on average 12 times a day and often remain unnoticed by outside observers, writes The Conversation. But the significance of such events can not be underestimated, because they contradict our ideas about fair market price and collective wisdom.
From the presence in the market of many investors with rich and versatile experience, we expect calmness and balance. In fact, even the most intelligent people turn into a crazy crowd, as soon as they become quite a lot.
Since 2006, more than 20 thousand of the mini-jumps described above have been recorded. They last only a moment, but for those who are in their epicenter, they end with losses, lawsuits and loss of reputation. Ultimately, they can lead to investors losing faith in the market and serious shocks like those that happened in 2010.
The same point of view is shared by regulators. One of the accepted rules recognizes invalid mistaken transactions (indeed, no one in their right mind sells shares for hundredths of a cent). Another operates on the principle of a fuse and "turns off" the auction, if prices soar too sharply.