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The morning of 8/24 was more complicated than that because lots of these stocks/etfs had hit their Reg SHO thresholds, which restricted the ability short sell into a resting bid.

https://www.sec.gov/divisions/marketreg/rule201faq.htm

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And when market-makers lose an option for managing their risk (hitting bids in a related security), they'll naturally charge a wider spread to buy, further diminishing liquidity that would stabilize the market.

SHO limits don't apply to bona fide market making, I'm nearly certain. But regardless, you would expect the inability to short by non-MMs would actually keep ETFs and Stocks from hitting their breakers, not making it worse. By definition, you remove sell-pressure.

Until 10AM that day, the problem was zero buy-pressure. No bids at all to speak of.

http://www.etf.com/sites/default/files/images/2_rspsurveyor....

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