Sure, the SEC and other federal agencies are looking into what may have caused Thursday's stock market plunge, but answers may not come as quickly as some wish. Now that the "fat finger theory" that a trader mistakenly entered "billion" instead of "million" has been discounted, the Wall Street Journal reports, that some traders wonder "whether rapid-fire computer trading, coupled with the market's complex trading systems, triggered a free fall that appears to have begun with an order to sell a single stock."

The WSJ offers this sequence of events:

A big order to sell Procter & Gamble Co. shares came a little after 2:40 p.m., when the stock market was already jittery over turmoil in Greece. Minutes later, the market plunged, ultimately declining nearly 1000 points before rebounding rapidly.

The sell order was sent to the New York Stock Exchange, where it caused a log-jam in trading. Suddenly, P&G shares, among the market's most stable, fell about 35%.

It's not clear precisely how the P&G trade affected other securities. But the tumbling blue-chip stock helped drag down the Dow Jones index. Traders believe the big drop in P&G was picked up by computer models, which set off a chain reaction of selling in other stocks.


There's a little more detail on that cascade effect here. Nasdaq's CEO Robert Greifield sniped on CNBC that the NYSE was at fault for stopping trading for certain stocks, "Stopping for 90 seconds in time of crisis is exactly equivalent to not picking up the phone." Then NYSE Eurotext's CE Duncan Neiderauer appeared on CNBC, complaining about Nasdaq's continued trading, "These computers go out and just find the next bid they can find." The NY Times has a graphic on how the stock market has become fragmented over the past few years.

The SEC may be considering some new rules: According to Bloomberg News, "SEC officials are weighing whether uniform trading curbs should be imposed across markets for companies that have fallen a certain percentage, said the people, who declined to be identified because the discussions are preliminary. The agency is examining whether any rules should include a time element because a steep decline that occurs in minutes may be more detrimental to markets than a decline over several hours, one of the people said."