Progress Energy trading halt sparks questions

NEW YORK, Sept 27 (Reuters) - Shares of Progress Energy Inc (PGN.N) were halted briefly on Monday on the New York Stock Exchange after trading triggered a circuit breaker, although more than 100 trades took place after the stock had moved enough to trigger a halt.

Nearly 60 erroneous trades have been canceled, according to a Nasdaq representative.

The halt occurred from 12:57 p.m. to 1:02 p.m. (1657 to 1702 GMT). The circuit breakers are triggered when a stock moves 10 percent or more within a five-minute period.

However, based on Reuters time-and-sales data, the stock hit a threshold that should have halted trading at $40.08 a share at 12:57:42.506, but continued to trade until 12:57:42.552, or 0.046 second, with at least 100 trades. The lowest price was $4.57 a share, with trades occurring mostly on the Nasdaq Intermarket.

"The NYSE-listed stock was trading on the Nasdaq Stock Market when an inaccurate limit price was entered by a trading firm. No trades were routed to other market centers. Approximately 57 trades have been canceled," a Nasdaq representative said.

A spokesman for Progress Energy said the lowest trade, at $4.57, was due to a typo in a sell order.

I don't believe the statement that this disruption was caused by a typo in a sell order. Every online broker I've ever used (7 different brokers) has software on its website that rejects an order entered with a limit price that's too far from the current bid or ask price. All these erroneous trades occurred in .046 seconds, so there wouldn't have been nearly enough time for the best bid price to fall far enough for any person to enter a sell order at $4.57 and have that order accepted by his broker. There's no way that could have happened. A sell order at $4.57 would have been rejected by every retail broker and I'm sure all institutional brokers and trading firms also use software that would have rejected this order.

So my conclusion is that some very knowledgeable people are hacking into the Nasdaq trading system and causing phony orders to execute that then can trigger stop loss orders and screw up numerous investors. The SEC seems to be slow to figure this out, or perhaps they have figured out that the Nasdaq is being hacked and they do not want to admit that truth to the American public. In any event, the Nasdaq needs to do a thorough analysis of its systems and figure out how their trading systems are being hacked, and then take action to prevent this from happening in the future.

No need for hacking.

It is deliberate quote stuffing. The HFT boys know what they’re doing.

http://www.nanex.net/FlashCrashFinal/FlashCrashSummary.html

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