Liberty Street Economics August 18, 2015. Liquidity during Flash Events – Ernst Schaumburg and Ron Yang – Second in a five-part series: “Flash events,” extremely large price moves and reversals over just a few minutes, have occurred in some of the world’s most liquid markets in recent years. What’s made these events remarkable is that they seem to have been unrelated to any discernable fundamental economic news that may have taken place during the events. In this post, we consider a few of the important similarities and differences among three major flash events in the U.S. equities, euro–dollar foreign exchange (FX), and U.S. Treasury markets that occurred between May 2010 and March 2015. All three flash events involved high trading volumes and long-term impacts on depth, but the U.S. Treasury event stands out in terms of both price volatility and price continuity.  The three events are summarized in the table below. Other notable recent events, such as the abandonment of the Swiss National Bank exchange rate floor on January 15, 2015 (FX), or the “taper tantrum” following Federal Reserve Chairman Bernanke’s testimony to Congress on May 22, 2013 (Treasuries), were clearly related to specific news announcements and therefore are less relevant as examples of flash events. However, it is worth noting that price movements in the flash events we describe were comparable to the movements seen following significant news announcements…”