"Why doesn't some tech guy just arb this?"

A lot of the tech guys I've talked to since the market crash look at the irregularities of a market panic and think that a tech guy looking to make a few bucks can make a program to make a ton of money the next time something like this happens. There are a few problems with that approach.

1. Setting up an running the kind of program that will make money in these situations costs money. Retail investors had really bad liquidity on thursday.  Making money on a rare event that only happens every few years is probably not a wise business decision. 

2. Even if you are good enough to set something up and correctly trade it, you could end up screwed. Nasdaq is cancelling trades on stocks that were 60% away from their "correct" price. So if you saw a stock trading at 40 drop to a few cents, bought the stock for pennies, then sold it for 30 dollars after it started to recover you are in a very difference position than the one you thought you were in originally. Rather than making about 30 dollars and having no position on, you are down 10 dollars for every stock you traded and you still have a short position that you need to close out.

3. Trading extreme drops is just as likely to get you burned as make you money. A stock can drop quite a bit because their drug wasn't approved, or a big lawsuit goes against them.  These types of one off events are probably just as common as the technical crazyness that occured on Thursday.  Maybe the next time markets all drop it is because of a terror attack or a real sovereign default. The programmer who decided to wade a little bit into finance could find themselves badly burned.

The above is also why quant funds specialize in trading generally trade in a style that resembles market making firms rather than a kind of type of special situation trading fund.  High frequency trading is also more likely to generate results that a statistically significant, which quantitatively inclined people generally like.  The quant market maker's job is to get out of the way when stocks start to move in an extreme manner so they aren't the ones left holding the bag.  On a day like Thursday, the problems were probably exacerbated when the quant market makers stood back around the same time people's automatic stops were being hit. Even though there are days like Thursday, the smart technologist interested in trading should probably focus on something a bit more systematic than technical meltdowns.