This story about the plunge in today’s US and world stock markets says that part of the problem was caused by a “trading glitch”
What kind of “glitch” could this be? Are they saying there is an error in the trading software?
Someone was trying to sell 15M shares and they “accidentally” set it up as a sale of 15B shares. Oops.
Made it look like major players were just dumping stocks.
Shitty Bank lives up to its nickname again.
I’m extremely dubious of this explanation. Institutional trading software doesn’t really work that way.
I think a more likely explanation is a bug in an institution’s automatic trading algorithm that caused an unexpectedly large sell-off due to some combination of circumstances that nobody considered. Usually, these systems are supposed to check with a human if they’re about a dump billions of shares, but who knows.
Accenture is back over $40 now. Wonder how many shares were traded for $0.01. Buy 1 million shares for $10,000 and next day you have $40 million. Nice little earner.
I accidentally the stock market.
My source was MSNBC’s Cramer on Hardball today. Take it for what it’s worth.
It’s sort of like the OJ futures trading scene in the movie Trading Places.
Something starts the prices of stocks going down, and everybody starts selling to try to dump their position before prices totally crash. This sends prices plummeting further, which causes more selling, into a major spiral. Today’s issue was exacerbated by computer trading, which can instantly start dumping stocks when the programs see certain patterns developing.
Eventually, people figured out that this was just insanity, and started trading in the opposite direction.
When I glanced at the price of P&G today I just about shit my pants. The list of things that could cause a stock like that to drop 27% in minutes is a very short one, consisting of maybe nuclear war and/or invasion from outer space. And, it turns out, a “trading glitch”.
Assuming those trades don’t get reversed.
Some already have been canceled. Businessweek - Bloomberg
The same thing was reported on the PBS news hour today.
Trades greater than 60% away from the last print before 14:40 eastern are broken. Everything else stands. Absolutely crazy.
This wasn’t a “fat finger” trade, it was heavy selling followed by panic selling coupled with a lack of liquidity. Corporate bonds, preferred stocks and closed end funds were getting hammered well before the general market drop off. Also, the fixed income markets and currency markets reacted before the equity sell off. A fat finger in Proctor and Gamble can’t have that kind of effect.
A VIX that’s up 50% in a week in addition to a potential sovereign debt crisis is good enough for a market panic.
I think that you’re right. Two of my equity managers (I manage pension assets) did independent analysis on trading that day and found no glitch. Both concluded that the cause of the market crash was a combination of automated trading and lack of circuit breakers at some trading markets.