Posted on 05/06/2010 1:58:32 PM PDT by Newton
In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses in what possibly could have been a trader error.
According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & Gamble [PG 60.75 -1.41 (-2.27%) ], a component in the Dow. (CNBC's Jim Cramer noted suspicious price movement in P&G stock on air during the height of the market selloff. Watch.)
Sources tell CNBC the firm in question that handled the erroneous trade is Citigroup [C 4.04 -0.14 (-3.35%) ]. The bank said it has no evidence of a bad trade but is investigating the situation.
(Excerpt) Read more at cnbc.com ...
Probably an Obama donor had his stop-loss hit and he lost his fortune. And now he wants a do-over.
I agree the whole thing stinks. But it is beginning to sound like pure manipulation. CNBC is reporting odd trades on small stocks in both the NYSE and NASDAQ, That said it does make me wonder why the computer is not programmed to stop clearly out of range trades and next how often does this happen and we never hear about it?
According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & GambleObviously this is the fault of the imperialist racist bankers who invented numerical terminology. :') Thanks Newton.
I’m a smart man but no little of the trading.
Query-to sell 16 billion of PG, would you not
Need to own that much in the first place? And does
Any one group or person own that much???
1.) The fact that the market dropped his dramatically overall because of an error in the price of one stock just shows how heavily dependent it is on computerized trading by the big market makers. This drop occurred so rapidly that it cannot have been done by human decision. It has to have been all program trading.
2.)This sort of “error” doesn’t happen by accident. It happens because of fraud. Someone made a lot of money off that drop today. They’ll know how this “error” occurred.
The system blithely lets a trade which is three orders of magnitude larger than anything likely to be reasonable enter the system, and the DJIA duly swoons.
Lets be charitable and assume it was an error. How easy would it be to do something like this deliberately as a sabotage?
I’d wonder why scientific notation is not the standard. e3, e6, e9, e12, etc instead of K, M, B, T.
It wasn’t a fat-finger.
This recording of a guy reporting from the pit (thank God for open outcry - it tells us stuff that computers don’t and won’t) tells us that this was *not* the result of a fat-finger keypunch error.
http://www.zerohedge.com/sites/default/files/Market%20Crash.mp3
How does the guy in the pit know what the guy in the office did and why?
It wasnt just P&G that took the hit - Accenture and another half dozen companies dropped to $.01 and then back up to near their normal levels withing a span of 4 minutes yesterday.
If I was a betting man I would bet on cyber-terrorism - but no one could ever admit it as it would cause such a panic with people pulling their money out.
The pit recording shows two things:
1. Wave of paper trades coming into the pit. He says early on the recording “paper seller_s_” coming into the pit. These are the people from different trading/brokerage houses putting their orders (on paper) into the pit, not electronic orders.
2. The bid dropped out - which uncovered more orders to sell, which comes in waves. These are likely stop-loss and limit orders going off.
In the recording, we hear that the bid just keeps dropping like a stone - and the speaker becomes fairly unhinged, which is kinda amusing like listening to a sports announcer screaming himself hoarse.
What actually happened was that the HFT boys (Tradebot, Tradeworx) pulled their boxes off the market - and this exposed the difference between volume and liquidity. The HFT boys have been claiming (with a straight face) that they’re providing liquidity, and this is ample justification for their existence in the markets.
Well, suddenly when the going got rough, they fled the market. So much for them providing “liquidity.”
I wouldn’t bet on terrorism.
When the NYSE sees the bids drop as fast as they were yesterday, they go into a slow-motion order execution. They’re not putting in stoppages, they’re just slowing the market down, maybe delaying orders by 30 seconds to a minute. This is their idea on how to avoid plunging since the uptick rule is gone.
ECN’s are not obligated to honor the last print from the NYSE. So when the computerized trading programs start pumping market orders out there, with a goal of “execute this market order as rapidly as possible” - ie, favoring speed of execution over price of execution - it will seek out whatever venue it can find to fill the ticket.
OK, so what happens when the market order gets routed to a ECN with low volume and wafer-thin liquidity?
You get market orders filled at absurd prices.
Since the NYSE is in slo-mo, they’re not the trade that prints on the tape - the absurd ECN market order is.
What does “ECN” stand for?
The massive 1000 point Dow plunge was Bush’s fault.
But the near recovery was thanks to 0bama.
It doesn't make sense for people to be selling off that large of quantities of some of those relatively stable stocks after they took such big hits. It makes me think that it was don't by a computer model with poor safeguards because they never thought this particular chain of events would occur.
Electronic Communication Network. A very bland, generic name which isn’t terribly helpful.
Think of it as a computer network of dealers that matches bids to buy against offers to sell securities - but in many cases, there is no ‘market’ order. You have to put the orders out there as a limit order or specify parameters inside which your order may be filled. Sometimes not all stocks, ETF’s and other products that are listed on the public exchanges are traded on ECN’s.
Here’s one ECN:
http://www.nyse.com/about/listed/lc_ar_overview.html
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