NEW YORK/WASHINGTON (Reuters) – A computer-driven sale worth $4.1 billion by a single trader helped trigger the May flash crash, setting off liquidity shocks that ricocheted between U.S. futures and stock markets, regulators concluded in a report.

The report by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission did not name the trader. Reuters, citing internal documents prepared by exchange operator CME Group Inc, in May identified the trader as money manager Waddell & Reed Financial Inc.
The long-awaited report focused on the relationship between two hugely popular securities -- E-Mini Standard & Poor's 500 futures and S&P 500 ""SPDR"" exchange-traded funds -- and detailed how high-frequency algorithmic trading can sap liquidity and rock the marketplace.
The ""flash crash"" sent the Dow Jones industrial average plunging some 700 points in minutes on May 6, exposing flaws in the electronic marketplace dominated by high-speed trading. The Dow was down nearly 1,000 points at its lowest point on that day.
Although the report did not make any recommendations, it lays the foundation for a special commission to propose new rules to avoid a repetition. At least one lawmaker threatened congressional action if regulators did not address the disparity in the markets.
Trading was turbulent that afternoon because of concerns over the European debt crisis. Against that backdrop, a ""large fundamental trader"" initiated a sell program to sell 75,000 E-Mini contracts as a hedge to an existing equity position, according to the 104-page report.