Anatomy of '1,000 flash crashes': What went wrong

Markets invoke 'Rule 48'

Monday's stock market action was bound to be messy, but it was made even worse by a major technical pile-up just as the session got underway.

Dubbed by one trader "1,000 flash crashes," the market opened to tumult in which multiple stocks and in particular exchange-traded funds cascaded lower as orders failed to get filled and prices went ballistic.

In all, 1,278 so-called circuit breakers—trading halts imposed when shares fall to various levels—were tripped across the major exchanges as the Dow Jones industrial average surrendered more than 1,000 points early on, according to New York Stock Exchange officials. The number of tripped breakers was believed to be a record, with ARCA's 999 the most, with the Nasdaq next at 194. A typical day sees fewer than 10.

Traders speculated that the invoking of Rule 48, which is used to head off panic trading but in this case seemed to chase market makers at the opening, was at fault. The rule allows stocks to open without price quotes ahead of time.

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