It was nearly one year ago—on Aug. 24, 2015—that chaos struck the stock market. More than 1,200 stocks and exchange-traded funds suffered trading halts and subsequent pricing irregularities.
Market volatility that day was, in part, a by-product of fears regarding the Chinese economy that took root at the start of the trading day. The good news is that limit-up/limit-down protocols adopted by exchanges after the 2010 “flash crash”—intended as a sort of circuit breaker to freeze trading in times of extreme volatility and radical pricing swings—were triggered in an effort to prevent market-wide contagion. It was clear, however, that problems that day were exacerbated by inconsistencies in when and how exchanges responded.
