What's the downside of having the flash crash? As far as I can tell, it only hurts people who use trading bots and set them up a certain way. Seems like just a natural consequence of using bots and nothing that really needs to be or even could be corrected, other than just people changing the way their bots trade.

Maybe the worry is that the exchange can manipulate the crash (and then buy themselves at the cheap price), but I don't really see how 'regulation' would fix this. It would just mean people with the government's permission can now manipulate the crash.

Seems like using bots in a way that doesn't leave you vulnerable to such things is the only solution.