convenient way for customers to access the stock market at home. The HFTs have taken over the once job of the stock exchange specialists, who would once by hand write the incoming orders providing a sense of liquidity (Laudon and Laudon, 2018). This increased us the of HFTs has made it difficult to keep surveillance over the stock market trading activity, which gives an opportunity for individuals to perform illegal and sneaky actions concerning the overall well- being of the market. 2. What management, organization and technology factors contributed to this problem? To what extent was it a technology problem? To what extent was it a management and organizational problem?
A FLASH CRASH: A NEW CULPRIT 5 On management’s part proper surveillance of the trading system was in place resulting in Sarao easily being able to manipulate the system. The role of management is to enforce control concerning the software, hardware, implementation and administration to specifically prevent any kinds of mishaps happening, especially situations like the flash crash. The organization should have thoroughly investigated Sarao when they had initially questioned him about his trading activity (Laudon and Laudon, 2018), but due to this fact Sarao continued with his activities until April of 2015 finally, when a whistle blower came forward and brought new information only then was appropriate action taken against Sarao. Had the organization take the first encounter with Sarao seriously, this flash crash could have been avoided. And lastly, in terms of technology, the high volume of trade happening hours before the crash was drastically overlooked. If workers had gone through the alarming data volume, instead of only focusing on
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- Fall '12