By Scott McCleskey, Complinet
It took five months, a PhD in Physics, a Nobel Prize winner and a staff of quants, but the SEC and CFTC have now figured out what happened to the markets during the “flash crash” in May. Given the well-orchestrated string of sneak-peeks the SEC had given before the publication of the joint report, the findings weren’t particularly surprising. Nevertheless, they are enlightening both for what they tell us about the state of the markets and for what they tell us about the assumptions we have made when regulating them. The upshot: markets aren’t efficient, and rulemakers should stop acting as if they are.