For a 14-second period during the Flash Crash, algorithmic interactions caused 27,000 contracts of the S&P 500 E-mini futures contracts to change hands. Yet, in net terms, only 200 contracts were purchased. HFT algorithms were automatically offloading contracts in a frenetic, and in net terms fruitless, game of pass-the-parcel. The result was a magnification of the fat tail in stock prices due to fire-sale forced machine selling. 22 These algorithmic interactions, and the uncertainty they create, will magnify the effect on spreads of a market event. Pricing becomes near-impossible and with it the making of markets. During the Flash Crash, Accenture shares traded at 1 cent, and Sotheby’s at $ because these were the lowest and highest quotes admissible by HFT marketmakers consistent with fulfilling their obligations. Bid-ask spreads did not just widen, they ballooned. Liquidity entered a void. That trades were executed at these “stub quotes” demonstrated algorithms were running on autopilot with liquidity spent. Prices were not just information inefficient; they were dislocated to the point where they had no information content whatsoever. (b)  Behaviour of low frequency traders  If the story stopped here the ending would be an unhappy, but perhaps not critical, one. After all, the Flash Crash was done and dusted within an hour. But the framework developed suggests these effects need not, in general will not, be transient. To the contrary, these effects might actually magnify. To see why, consider now the behaviour of low frequency traders (LFT).

Contagion can be global as our countries' financial systems are interconnected. This follows President Macron's call for an "Internet of Trust" at the UNESCO Forum in November 2018, which includes helping low-income countries to keep pace with developed countries. The IMF and the World Bank are encouraged to further develop their assistance program. In addition, coordination should be cross-sectors. The financial sector is not the only one concerned with cyber-attacks. Other critical sectors are also at risk, some of which are essential to the functioning of the financial sector. This reinforces the importance of a cross-sectoral approach. National security agencies use this approach, and financial sector authorities  Page 2 sur 6 could also do the same at their level, taking into consideration the forthcoming G7 CEG Fundamental elements. Finally coordination should be cross-authorities, with national security agencies. As discussed in Panel 1, those agencies have the role to protect the countries’ critical economic sectors, including the financial sector, against cyber-attacks. Financial authorities have the role to supervise the financial sector’s capacity to manage its risks, including cyber risks. Both authorities have a mutual interest in coordination. B. Three concrete areas to improve our coordination I. Regulation and supervision I would like to start with the issue of regulation, which was addressed by panel 2. One difficulty with regulation is about reaching a balanced situation. Regulation is needed, irrespective of the level of institutions’ awareness and self-discipline… But, too much regulation may lead to a decrease in selfdiscipline and turn institutions’ effort into a compliance exercise.