Really?? Someone with fat fingers and one keystroke brought the NYSE to near panic??

[deminks]

In a matter of a few minutes??? Color me astounded. Also sceptical.

I would sooner think someone had an agenda.


http://www.reuters.com/article/idUSTRE64631Y20100507

The slide, which in one 10-minute stretch knocked the index down nearly 700 points, may have been triggered by a trading error. Major stock indexes eventually recovered from their 9 percent drops to close down a little more than 3 percent.

But the follow-through selling that pushed stocks of some highly regarded companies into tailspins exacerbated concerns that regulators can quickly lose control of the markets in a world of algorithmic trading.

(snip)

One NYSE employee leaving the Big Board's headquarters in lower Manhattan said the P&G share plunge lay at the center of whatever happened.

"I'll give you a tip," the employee said, speaking on condition of anonymity. "P&G. Check out the low sale of the day. Something screwed up with the system. It traded down $30 at one point."

(snip)

"It validates the decision to offer a hybrid market here where there's a human component married with the electronic," Louis Pastina, executive vice president of NYSE Operations told Reuters in an interview.

The NYSE's rivals advertise lower prices or faster transaction speeds.



http://www.reuters.com/article/idUSTRE64631Y20100507

(snip)

Kaufman and Senator Mark Warner -- both Democrats -- said Congress needs to investigate the plunge, which at its deepest point wiped nearly $1 trillion off equity values.

And a House panel has slated a hearing on the causes for the market swoon for next Tuesday, with its chairman, Rep. Paul Kanjorski, urging the SEC to investigate as well.

The scary afternoon in markets came at a bad time for Wall Street, already reeling from accusations that it is a rigged casino -- a criticism stoked by recent civil fraud allegations against Goldman Sachs Group Inc.

The industry has been trying to stave off the Obama administration's calls for tough financial regulation, and the sell-off came as the Senate turned back a Republican effort to weaken a plan to set up a financial consumer watchdog.

(end snips)

So, somebody with fat fingers, or someone with a fat head and a fatter wallet?

[gravity]

1. Computer trading would have done it

Computer programs will sell stocks if they go below a certain price to protect against a loss. When the price drops trigger more sell orders, it will create a chain reaction in selling across the board. Fears about Greece would have also caused traders to panic and sell into the drop off too.

Once people realized that is was a mistake, the prices rose back to their normal levels in a matter of minutes.

[boston bean]

2. Here is a pic of the alleged fat fingered bankster

[FailureToCommunicate]

9. That figures: a guy in a suit! (Why DID a caveman wear a tie anyway?)

[melm00se]

15. Fred

was certainly NOT a suit...he was a blue collar crane operator.

[boston bean]

20. Always blame the little guy! It's the American way!

[FailureToCommunicate]

22. Fred may have been "blue collar" but he always wore a tie. (I was being facetious BTW)

Of course Fred was also "Green Collar": He operated a crane that didn't pollute -other than dinosaur poop.

[spanone]

3. that's a theory. what's scary is that they don't really know what happened

[tekisui]

6. They can't trace it back to one fat finger?

Bizarre.

[sui generis]

4. I used to post trades to the Italian exchange

some years ago for a multi-national, and they were unregulated posts in the hundreds of millions of dollars. Because the Italian market did not have a daily "close" at the time, a single digit slip going into billions could easily have given the Italian market a death-blow stroke, followed almost instantly by the Euro crashing and bleed out into other non-domestic markets well before any form of correction could take effect.

It's really dismaying how few REAL controls there are in manual market trading and what extraordinary consequences can follow from a stupid keyboard error, but I'm telling you it is certainly possible.

Don't know if I believe this particular story however, it seems a bit too well detailed on short notice. I think something more serious happened.

[sui generis]

5. dupe delete

[FLPanhandle]

7. As someone who has worked in IT on Wall Street, I can believe it.

It would scare the hell out of most people to realize the crappy technical infrastructure supporting world commerce.

[KittyWampus]

27. I would love to hear more about it. Welcome to DU!

[Celebration]

8. good gosh you should have heard the Nasdaq guy

Trying to defend this :rofl:

"The NYSE FAILED because it FAILED to create a market for ninety seconds. We did our job because there was not one second that the laws of supply and demand didn't work, and there was no break in our creating a market."

Batshit crazy!

[bullwinkle428]

10. My guess is that whoever profited from this "mistake" will try

their damnedest to see that this "mistake" occurs again and again!

[Statistical]

12. The persons making the mistake were the ones who sold off P&G and Accenture

at insanely low prices. They sold it all the way day. Essentially trying to sell couple billion dollars worth of stock @ market all at once.

So the people making the mistake lost a massive amount of money.
The winners were people in right place right time.

For example: someone who like P&G for example but didn't want to pay $60+ had a long term limit order to buy 100 shares @ say $55.

That order executed. As did another one @ $55 and another couple thousand shares to another person @ $54.90 and all the way down into the $40s before they caught the mistake.

I doubt any broker will try the strategy of handing over billions of dollars in stock to third parties in the future.

However it will happen again because the markets are too fast. To much computer control, too many decisions made in milliseconds, and no safeguards to slow it down when these trading programs run amuk.

Saying someone will intentionally do this again is like saying BP will intentionally destroy another oil well because the recovery crews are making so much money working overtime.

[northernlights]

16. in the end, none of the traders in that time span won or lost

They've cancelled every trade that happened in that crazy time frame. So the people who bought $100 of Accenture at $0.01/share and watched their fortunes skyrocket as it recovered to it's original price...had a nice roller coaster ride, and in the end were handed back their $100.

Overall, still a loss because it scared the bejeezus out of so many...and maybe woke a few people up to the insanity that is the financial system.

[gravity]

18. They only canceled the trades that went over 60% from the starting price

Most of the trades went through, just not the extreme $0.01 ones

[Statistical]

19. Most of the trades were busted but that wasn't really the point...

However it isn't like whoever fucked up and tried so sell 40 billion dollars worth of Accenture either wanted to do that or had a method to profit from it.

The people thinking some broker did this on purpose are silly. The broker making the mistake was on the losing side of the trades and lost (or would have lost if they hadn't been busted) billions.

We need real reform on wall street and that should include limits on money flow.

[havocmom]

13. Could it have been a warning shot to Congress, busy with reform?

Sorta like: fuck with the Street and the Bankers and we will fuck you up bad - see how fast a fall can be set off?

[druidity33]

17. that thought scares me. nt.

:(

[havocmom]

28. Are you old enough to remember the 'duck & cover' drills in school back in the day

world leaders played nuclear brinkmanship? I think corporations are doing something similar.

Wars are now between multi-national corporate giants, not leaders of nations. The news just isn't reporting much about war anymore. Not even the wars that diverted us from the real threats.

[Kolesar]

11. Put the Duke brothers' seat on the exchange up for sale

[SOS]

25. OT - but my favorite movie line....

Mortimer Duke: We seem to be paying our employees an awful lot of money.
Lewis Winthorp III: No getting around the old minimum wage, Mortimer.

[Kolesar]

30. "I was Agent Orange" eom

[flyarm]

14. Yeah right...and i have dead birds and dead fish on my beach and Oil in my water for you..cheap! eom

[ljm2002]

21. I don't believe it either...

...and here's why: (1) if indeed the person typed "b" instead of "m", the keys aren't next to one another on the keyboard so it's almost like you'd have to try to make the error; (2) if they typed in a numeric value, then it's easy to see how ONE extra zero could be added accidentally -- but THREE extra zeroes, by accident? I don't think so.

Also there is the symptoms. You had some stocks going down to $.01/share or even $0. You had other stocks going up to $100,000/share. While most stocks just reflected the overall market slide. I dunno, while I can see big swings overall, it makes no sense that only some stocks would have these wild plunges and rises.

Finally: if someone's fat fingers caused this, then one has to question the overall system. First, why didn't the system recognize and flag a trade that was far outside normal bounds, and require confirmation of the trade before putting it through? Second, if certain individual stocks sunk to $.0 while others rose to $100,000 as a result of an input error, then there are some serious bugs to track down.

The explanations don't jibe. This does not inspire confidence; rather it makes the market look more like a casino operation than ever.

[Arkana]

23. Clearly it was President Obama.

He did it. It was all his fault.

Anyone who disagrees with me is a DLC sellout and a corporate tool.

[marions ghost]

24. whatta buncha hooey

but a lot of people will buy it...

Creative damage control.

[jberryhill]

26. Happens to me at the ATM all of the time...

...and it takes a while to re-deposit 100 million dollars in twenty-dollar bills.

[izzybeans]

29. It's the computers.