| Recurring |
unknown |
(a) The software failure incident related to the May 'flash crash' has not been specifically mentioned to have happened again within the same organization (Waddell & Reed) or with its products and services in the provided article [3058].
(b) The article does not mention any specific instances of the software failure incident similar to the May 'flash crash' happening again at other organizations or with their products and services [3058]. |
| Phase (Design/Operation) |
design, operation |
(a) The software failure incident related to the design phase can be attributed to the trading program's automated trading software used by a large investor to sell futures contracts. The report by federal regulators highlighted that the trading algorithm used to sell orders for futures contracts called E-Minis contributed to the massive stock slide on May 6. The algorithm's response to an increase in trading volume by feeding more E-Mini sell orders into the market led to a liquidity crisis affecting both the broad index level and individual stocks [3058].
(b) The software failure incident related to the operation phase can be seen in the rapid selling of E-Mini futures contracts affecting the underlying stocks and broader stock indexes. The operation of the automated trading software, particularly the execution of large numbers of contracts quickly on a day already under stress due to concerns about the European debt crisis, played a significant role in the flash crash [3058]. |
| Boundary (Internal/External) |
within_system |
(a) within_system: The software failure incident, known as the "flash crash," was primarily caused by a large investor using an automated trading software to sell futures contracts. The trading program, specifically the trading algorithm used by the investor, initiated a rapid and massive selling of E-Mini futures contracts, which led to a chain reaction affecting the broader stock indexes [3058]. This indicates that the failure originated from within the system, specifically the automated trading software and algorithm used by the investor. |
| Nature (Human/Non-human) |
non-human_actions, human_actions |
(a) The software failure incident in this case was primarily due to non-human actions. It was reported that a large investor used an automated trading software to sell futures contracts, which sparked the "flash crash" on May 6 [3058]. The trading program, specifically the trading algorithm, was responsible for the rapid selling of E-Mini futures contracts, leading to a lack of buyers and affecting the broader stock indexes. The algorithm responded to an increase in trading volume by increasing the number of sell orders, contributing to the market turmoil [3058].
(b) Human actions were also involved in this software failure incident. The large investor made the decision to use the automated trading software to sell futures contracts, which ultimately triggered the flash crash. While the specific investor behind the sell order was not named in the report, it was a human decision to utilize the trading algorithm that led to the massive stock slide [3058]. Additionally, there were discussions about the need to rein in the use of algorithms by high-frequency traders to prevent similar incidents in the future, highlighting the role of human actions in shaping market regulations and practices [3058]. |
| Dimension (Hardware/Software) |
hardware, software |
(a) The software failure incident related to hardware:
- The incident was triggered by a large investor using an automated trading software to sell futures contracts, which led to the "flash crash" on May 6 [3058].
- The automated trading software used by the investor was a contributing factor to the massive stock slide, indicating a software failure aspect [3058].
(b) The software failure incident related to software:
- The trading program, specifically the trading algorithm used by the investor to sell orders for futures contracts, was identified as the primary cause of the flash crash [3058].
- The algorithm responded to a rise in trading volume by increasing the number of sell orders, leading to a lack of buyers and rapid selling that affected the underlying stocks and broader stock indexes [3058]. |
| Objective (Malicious/Non-malicious) |
non-malicious |
(a) The software failure incident related to the May 'flash crash' was non-malicious. The incident was caused by a large investor using an automated trading software to sell futures contracts, which sparked the historic stock market crash. The selling was initially absorbed by high-frequency traders and other buyers, but the algorithm used by the investor responded to the rise in trading volume by increasing the number of sell orders, leading to a liquidity crisis and affecting the broader stock indexes [3058]. The incident was attributed to technical factors and the actions of market participants rather than any malicious intent. |
| Intent (Poor/Accidental Decisions) |
accidental_decisions |
(a) The intent of the software failure incident was not due to poor decisions but rather accidental decisions. The incident was sparked by a large investor using an automated trading software to sell futures contracts, which led to the "flash crash" on May 6. The investor's use of a trading algorithm to sell orders for futures contracts called E-Minis contributed to the market turmoil, but it was not due to poor decisions. The investor, later identified as Waddell & Reed, stated that it did not intend to disrupt the market and was one of possibly 250 other investors trading the E-mini futures contract on that day [3058]. |
| Capability (Incompetence/Accidental) |
accidental |
(a) The software failure incident related to the "flash crash" on May 6 was not attributed to development incompetence but rather to the actions of a large investor using an automated trading software [3058].
(b) The software failure incident leading to the "flash crash" on May 6 was accidental, as it was caused by an unnamed investor using a trading algorithm to sell orders for futures contracts, which then triggered a chain reaction resulting in the historic stock market plunge [3058]. |
| Duration |
temporary |
The software failure incident related to the May 'flash crash' mentioned in Article 3058 can be considered as a temporary failure. The incident was triggered by a trading program, specifically an automated trading software used by a large investor to sell futures contracts. The report by federal regulators highlighted how the trading algorithm used by the investor led to a rapid and massive stock slide on May 6. The incident was a result of specific circumstances, such as the automated trading algorithm responding to an increase in trading volume by feeding more sell orders into the market, causing a liquidity crisis and affecting both the E-Mini futures contracts and individual stocks. The incident was not a permanent failure but rather a temporary disruption caused by the specific actions of the trading program in certain circumstances [3058]. |
| Behaviour |
crash, other |
(a) crash: The software failure incident in this case can be categorized as a crash. The trading program's automated trading software caused a massive stock slide on May 6, leading to the historic stock market "flash crash." The Dow Jones industrial average plunged nearly 1,000 points, briefly erasing $1 trillion in market value, before regaining much of the lost ground to close lower, making it the largest one-day drop on record [3058].
(b) omission: There is no specific mention of the software failure incident omitting to perform its intended functions at an instance(s) in the provided article.
(c) timing: The software failure incident is not described as a timing issue where the system performed its intended functions correctly but too late or too early in the provided article.
(d) value: The software failure incident is not attributed to the system performing its intended functions incorrectly in the provided article.
(e) byzantine: The software failure incident is not described as a byzantine failure where the system behaves erroneously with inconsistent responses and interactions in the provided article.
(f) other: The behavior of the software failure incident in this case can be described as a rapid and significant disruption in the market caused by the automated trading software executing a large number of sell orders for futures contracts, leading to a lack of buyers and affecting the broader stock indexes. This behavior resulted in a crash scenario where the system lost control and led to a flash crash in the market [3058]. |