From Herding Machines to Autonomous Agents: A Taxonomy of AI-Driven Flash Crash Mechanisms and the Regulatory Gap
A prospective review proposes a three-category taxonomy of the mechanisms through which AI triggers catastrophic, self-reinforcing market dislocations, or “flash crashes,” and concludes with policy recommendations on model-diversity mandates, real-time AI trading surveillance, adaptive circuit-breaker design, and cross-regulatory coordination on GenAI financial disinformation.