The E-mini S&P futures market is incredibly illiquid, which is why one guy can game it this way. Look at the current volume on the June 15th contract: http://fi

The E-mini S&P futures market is incredibly illiquid, which is why one guy can game it this way. Look at the current volume on the June 15th contract: http://finance.yahoo.com/echarts?s=ESM15.CME+Interactive#symbol=ESM15.CME;range=5d http://finance.yahoo.com/echarts?s=ESM15.CME+Interactive#sym... It's 343! That's zero to a good approximation. So this guy found a low-volume market that he could game with large sell orders above the current price that he would cancel (automatically, eventually) so he had a low (but crucially: non-zero) risk of actually having to sell at that price. Others would see the large sell volume and sell themselves, driving the price down. He would buy at the lower price, stop placing sell orders and watch the price bounce back up, absent his manipulation. This is likely illegal in the letter of the law as written in 2010, and fair enough. Illiquid markets are easily subject to this kind of thing and if you want people to invest in them maybe you need to police them against it. Whatever. But to call this "the cause" of the flash crash is like saying my neighbour's love of fireworks is "the cause" of my house burning down after I deliberately poured gasoline all over it. Sure, maybe my neighbour should have been more careful, but they had a reasonable expectation that my house would be ordinarily fire-proof, and behaved accordingly. And of course this guy dominated the market when it was falling rapidly: his algorithm would have a field day in such an event, placing and cancelling multiple sell orders as fast as it could all the way down. So to cite that as some kind of evidence is to put effect before cause. The only way this could have "caused" the flash crash is if a whole lot of large trading algorithms were using E-mini S&P futures as a a major input, and doing that--using such an illiquid, easily-manipulated market to drive large orders--that is criminal. Or should be.