Something has been fucky about this narrative from the start. The guy was spoofing something like 300 emini contracts and turned his system off before the bulk of the actual flash crash happened yet I’m to believe it was all some autistic dude and not the massive sell orders cited in the original 2010 report?
More detail here: www.ft.com/content/027fc1ea-ea60-11e4-96ec-00144feab7de
The official report on the flash crash, released in September 2010, highlighted the impact of a rapidly executed $4.1bn sale of stock index futures by a single institutional investor, Waddell & Reed, which began at 2:32pm EST. A trade of that size went well beyond what Mr Sarao could have done. According to the complaints, Mr Sarao switched off his layering program at 2.40pm that day, two minutes before the S&P 500 really started to plummet. He kept trading during the crash and for years after.
I mean I’m glad they’re not locking this poor asshole up I guess?
E: also here’s the SEC report on the crash back from 2010 where they expertly analyzed the HFT activity by examining aggregate minute by minute activity and ignoring BATS or any dark pool trading.