A new study reveals how the structure of financial markets can unintentionally amplify systemic risks during periods of economic stress, even when individual institutions act rationally. Researchers examined how interconnected trading networks and automated trading systems may accelerate market volatility when faced with unexpected shocks. The findings suggest that traditional risk management models may overlook these cascading effects, raising concerns about the resilience of modern financial systems. The analysis highlights the need for closer scrutiny of market design and regulatory frameworks to mitigate potential vulnerabilities.
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