Panic, Purge or Patience?

[GGT]

No, this right here is exactly what I'm talking about. You *clearly* don't even understand the meaning of the jargon involved in this discussion (as you've been using it wrong all thread), but there's absolutely no chance that you'll admit you may have been mistaken, and anyone who disagrees with you or provides a source that disagrees with you is being a whiny ass, or contentious, or histrionic, and so on. No citation, no refutation, not even an attempt at explanation or logic - just "you disagree, so you're being histrionic."

It's pathetic. You don't see me jumping into threads and insisting that the proper way to operate on a colon is to go in through the throat, because I don't know a fucking thing about surgery. But you, you don't even have an intro college level understanding of economics or finances (or understand what a corporation means when they say "software engineer," or seem to grasp even the concept behind fractional-second trading and so on and so on), yet you jump into every thread about the economy or the stock market with unparalleled zeal about what's wrong and how to fix it, and despite being proven misinformed or flat out wrong, by any number of posters, you won't admit you're wrong or unknowledgeable on the topic, and probably wouldn't even if you had a gun to your head. And then, like nothing's happened, you trot out the same fallacious, refuted drivel in the next page or thread. Gah.

And you won't shut up about it either. Page after page (in thread after thread) of you spouting obviously incorrect information about the economy, finances, the stock market, and no matter who's correcting you, you won't just listen or change the opinions you have, (or even stop repeating the obviously false information and incorrect opinions) which are based on completely faulty information. And it's like the possibility that you could be wrong about this thing you're completely uninformed/misinformed on doesn't even occur to you. It's just... painful.

Then join the crowd, you're a pain in the ass as well.

In case it escaped your brilliant mind, I started this thread specifically to take it out of other ones. Because (well just slap me) I thought it might be interesting to discuss behavior as we watch it in real time....the panic, the purge, the patience....as it's connected to rapid internet response. None of this would be possible without the nerds and geeks who programmed this stuff.

The underlying philosophies are important, and I'm more than willing to give kudos to those who make technology available so we can discuss this shit. The math quants, the engineers, the geeks and nerds, they're all amazing and I love them. Admire and appreciate them.

That doesn't mean I can't bitch about the guys who take such a great special knowledge and exploit it, or use it in bad ways just because it makes them millions.

Like I can love and admire scientists who discover genomes or pathogens. But instead of using their discoveries to make vaccines or cures, some turn their knowledge into biological weapons. There are middle men along the way. I don't have to be a triple PhD to observe these things. In fact, it's often "regular people" outside the elite academic structures that can give the best feedback.

But don't let that stop you from being hostile and contentious toward me, Cain. And by all means, keep being a prick about your method of educating me, all of us---we, the peons who don't really understand things, the ones you love to bash and belittle, because it's really more about you puffing your chest to inflate your ego than anything else.

Does it mean more if I demure? Fine then, I don't know a damn thing about a damn thing. I am wrong, misguided, ignorant, uneducated. Pretty much everyone here fits that description, and perhaps you only like talking to your intellectual "peers". That works great for small academic circles, but not for forums.

Way to go.

[Supermarioman]

I'm amazed that we trust people who can't even tell the difference between b and m with this much money.

[GGT]

I'm amazed that we trust people who can't even tell the difference between b and m with this much money.

It was a typo.

Some trader hit 'b' (for "billions") instead of 'm' (for "millions").

According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & Gamble, 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.)

Not the first time this has happened (it's happened like a dozen times in Japan since the 90's), and it's not a big deal. Except for the dumbass who hit the wrong button, the company that employs him, and occasionally, the guys who wrote the trading software. As far as market moving typos go, this isn't even that big a deal. Try being the company that accidentally sells ~100,000,000 shares of whatever at ~10 yen each, instead of ~10 shares of whatever at ~100,000,000 yen each. That's how you go bankrupt. (Or lose $345 million dollars, as the case actually was).

See, it's not the first time this has happened, and it's no big deal. It's occurred like a dozen times, in Japan, since the 90's.

No big deal, kid. Except for the guys who wrote the software. Cain says so.

The companies won't go bankrupt now though, they cancelled the trades. The programmers must have added something since the 90's to let the fat finger dude off the hook.

Isn't that nice to know?

[Hazir]

Still it's interesting to see how easily people swallow this 'm' 'b' fuck up. It's really not so easy for a trained typist to mix up those two letters; for your finger to wind up on the b rather than on the m without it making an entirely different movement your entire hand has to be two positions to the left of the correct position. In which case everything typed otherwise is jibberish.

[Dreadnaught]

It's also kinda funny that people think traders just sit at desks typing "Sell four billion of that them thar stocks 'cause I'm on Wall STreet lol" into a console and the systems just execute.

I really doubt it works like that, they probably enter exact numbers (which can still be entered wrong).

[Hazir]

It's also kinda funny that people think traders just sit at desks typing "Sell four billion of that them thar stocks 'cause I'm on Wall STreet lol" into a console and the systems just execute.

I really doubt it works like that, they probably enter exact numbers (which can still be entered wrong).

Yeah, which means that we're sort of being led around with a bogus story for the simple reason that they haven't figured out what happened or don't want it out in the open.

It wouldn't surprise me if this wasn't a fuck-up but an intentional disruption, for example by a disgruntled employee.

[Being]

The companies won't go bankrupt now though, they cancelled the trades.

How can they legally cancel trades without the buy-in of the people who made the trades? I mean anybody who bought low is going to be screwed. Something very fishy seems to be taking place. It's like from here on out you won't know for sure your trade is valid. If I bought Accenture at $0.10, does that mean my purchase is invalidated?

http://money.cnn.com/2010/05/07/mark...cnn=yes&hpt=T3

[EyeKhan]

This is all going to fall apart.

[Being]

Really, can the econ whizs chime in here and make sense of this?

edit: Does this erase the historical dip? Because if it does, we have found a way to change history.

[EyeKhan]

Doom. DOOM, I say.

[wiggin]

Being - thousands of trades a day are sometimes canceled due to high market volatility (this isn't new). Essentially, you normally have mechanisms that smooth out volatility in the markets, but they failed yesterday. The NYSE is pointing fingers at the other exchanges - they temporarily slowed trading of the affected stocks when they dipped a bit too much, but other exchanges kept on trading them at their own prices. These thinly traded stocks were very volatile and not very meaningful in terms of real prices.

[Being]

Being - thousands of trades a day are sometimes canceled due to high market volatility (this isn't new). Essentially, you normally have mechanisms that smooth out volatility in the markets, but they failed yesterday. The NYSE is pointing fingers at the other exchanges - they temporarily slowed trading of the affected stocks when they dipped a bit too much, but other exchanges kept on trading them at their own prices. These thinly traded stocks were very volatile and not very meaningful in terms of real prices.

With that being the case, how and when do you ever know your trade is valid? These trades happened yesterday and were cancelled today. What about all the trades that took place inbetween? Are they corrected by number of shares or by dollars payed or received for the trade.

[CitizenCain]

But don't let that stop you from being hostile and contentious toward me, Cain. And by all means, keep being a prick about your method of educating me, all of us---we, the peons who don't really understand things, the ones you love to bash and belittle, because it's really more about you puffing your chest to inflate your ego than anything else.

Pearls and pigs.

Look, information and knowledge have value. They require time and effort to acquire. If you don't like the way I impart knowledge, or the terms under which I do so, you're are free (and in fact, encouraged) to go out and invest your time and effort in learning these things for yourself. Otherwise, beggars can't be choosers, so stop whining that the big mean Cain doesn't think that politely and patiently trying to educate you is a worthwhile endeavor.

Still it's interesting to see how easily people swallow this 'm' 'b' fuck up. It's really not so easy for a trained typist to mix up those two letters; for your finger to wind up on the b rather than on the m without it making an entirely different movement your entire hand has to be two positions to the left of the correct position. In which case everything typed otherwise is jibberish.

Traders aren't exactly trained typists, though.

And it's not as if they're typing out their orders free-form into a Word window. Most of the trading programs that the actual stock brokers interact with look similar to web forms, complete with shortcut keys and the like. 'B' for billion and 'm' for million, for example. Type stock name in this field, quantity in that one, other variables in their respective fields, and click submit.

Yeah, which means that we're sort of being led around with a bogus story for the simple reason that they haven't figured out what happened or don't want it out in the open.

It wouldn't surprise me if this wasn't a fuck-up but an intentional disruption, for example by a disgruntled employee.

Past instances of this kind of fuck up have turned out to be what they appear - typos/miskeys - so I'm not sure why this time would be entirely different.

It's also kinda funny that people think traders just sit at desks typing "Sell four billion of that them thar stocks 'cause I'm on Wall STreet lol" into a console and the systems just execute.

I really doubt it works like that, they probably enter exact numbers (which can still be entered wrong).

Sure, but '1' 'b' is quicker than typing out '1000000' (and easier than counting zeroes to make sure you got it right), which is why shortcut keys exist.

How can they legally cancel trades without the buy-in of the people who made the trades?

It's part of the legalese you sign when you use this stock exchange or that stock exchange. The NYSE, for example, reserves the right to revoke "erroneous" trades, where as the Tokyo stock exchange is the opposite - they will not revoke trades, even obviously erroneous ones. (And they've been sued, unsuccessfully, over that policy, FWIW.) It's like buying shit online - the website generally reserves the right to cancel orders on items that are mispriced. (I'm thinking of the incident where Best Buy priced a bunch of $6,000 big screens for 59.99, instead of 5999.99, and canceled dozens of orders.)

With that being the case, how and when do you ever know your trade is valid? These trades happened yesterday and were cancelled today.

There's a time limit on how far into the past they'll go to revoke a trade - so generally, if your trade survives the next trading day without being revoked, you can safely assume it's good.

What about all the trades that took place inbetween? Are they corrected by number of shares or by dollars payed or received for the trade.

I think the NYSE treats it like it just never happened. Buyer gets money back, seller gets stock back. No "corrections" or adjustments for price fluctuations between then and now.

[Cracky]

At the local places around here the software freaks out and gives you a dozen confirmation dialogs if you enter an order that's even slightly out of whack with the going rate...

I think we are looking at something more than an "accidental b".

[CitizenCain]

This is apparently not the case with big time trades on major stock exchanges (for some reason I can't even being to fathom - maybe the extra half a second spent clicking a confirmation dialogue is hugely costly, or something).

The last time this happened (Tokyo, December 2005), the company that wrote the software got dragged into court over the fact that there weren't any confirmation dialogues, or error checking (the trade that cost the company ~30 billion Yen was for more stock of whatever than even existed). And, FWIW, the company that wrote the trading software prevailed in court - the RFP and contract didn't mention anything about error checking or confirmation dialogues, so the program didn't come with any.

Kinda neat/terrifying/clusterfucked how e-Trade has more safeguards in place for someone selling $16 worth of stock than Citigroup has in place for selling $16 billion worth of stock.

[Dreadnaught]

With that being the case, how and when do you ever know your trade is valid? These trades happened yesterday and were cancelled today. What about all the trades that took place inbetween? Are they corrected by number of shares or by dollars payed or received for the trade.

I imagine they just say "every exchange that happened between these hours of unclear possible-error are invalidated. Everyone gets the number of shares back."

The exchanges can do this after all, they are the ones who are exchanging the shares and can credit/debit said shares from accounts.

[GGT]

How can they legally cancel trades without the buy-in of the people who made the trades? I mean anybody who bought low is going to be screwed. Something very fishy seems to be taking place. It's like from here on out you won't know for sure your trade is valid. If I bought Accenture at $0.10, does that mean my purchase is invalidated?

http://money.cnn.com/2010/05/07/mark...cnn=yes&hpt=T3

Volatility You Shouldn't Believe In

Posted 05/07/2010 07:06 PM ET
Markets: We've often talked about the risks of extreme volatility inherent in our new fragmented electronic markets and possible dangers invited by not reinstating a potent uptick rule. Thursday was another case in point.

The wild gyrations in both individual stocks and market indexes confirmed our worst expectations. After the close, we heard that some of the most damaging trades, perhaps due to an erroneous keystroke, would be canceled. This is not a solution and could even makes things worse.

We've surrendered control of our markets to the premise that fast is always better. Thursday's action spoke otherwise. Our overbought market had been correcting for two weeks because of fears over the debt crisis in the euro zone, wild currency fluctuations and the unwinding of the carry trade. These kinds of factors have roiled markets forever. More important, investors large and small can understand them to a degree.

On Thursday, however, something far more dangerous took place. Sometime after 2:40 p.m. New York time, the markets were slammed by a wave of electronic selling that sent the Dow Jones industrial average to a record 1,010-point intraday decline.

Most of the damage was done in a 15-minute span during which the Dow plummeted 700 points only to bounce back 600 to close with a more modest 348-point loss. Big Board volume was the second-heaviest on record, and Nasdaq trade was the busiest ever.

More inexplicable was the action of certain individual stocks. The sell-offs and run-ups in blue chips such as Procter & Gamble, Apple, Microsoft and 3M were so sharp and sudden, they took even seasoned traders' breath away.

So what happened? Pick your favorite electronic buzzword: an erroneous (fat finger) order, a runaway program trade, a mutant algorithm, an errant high-frequency trading platform, a bungled black box, a loose quant program. But it doesn't really matter.

What matters is what didn't happen. No one was there to say "Stop! Something looks wrong here" or "Let's slow things down and avert a potential catastrophe." It appears that a stronger uptick rule with some teeth is needed.

Short-sell short orders had few controls to prevent them from worsening the declines. When NYSE circuit breakers slowed trading in selected stocks for 90 seconds (wow, such a long time!), giant sell orders simply migrated to ECNs or the Nasdaq, where no similar collars existed, seeking any bid.

No one applied the emergency brake. That is what can happen in fragmented markets with no central system of price discovery. Volume is spread among so many trading platforms and exchanges with different rules and oversight (the NYSE transacts only 28% of total volume). It's like the Wild West with no sheriff.


So now we hear that certain trades are being canceled. That might compound the problem because so many derivative products are interconnected like ETFs, options, futures, etc.

As an example, 3M traded between a high of 90 and a low of 68. If you cancel the sell orders at 68, what happens to the brave buyers who may have taken profits at 75? Do you bust those trades also? And how about the related S&P index futures that gyrated because of components like 3M? Do you bust out some of those trades?

You get the idea. These trade cancellations could further undermine confidence in our markets. Who's going to trade in the future if you go to bed with a big profit and wake up with a loss?

We all understand that electronic markets are here to stay. What we need, however, is an electronic market, not markets — a market that features a system of price discovery that has one set of rules for all platforms and exchanges, is transparent rather than secretive, is consistent not fractured, and is fair not privileged.

We also need a mechanism that will slow down all electronic trading equally, maybe even stop it, before the wheels come off. Accountability must be restored or else our public markets will lose the public.

http://www.investors.com/NewsAndAnal...aspx?id=532773

[Being]

I imagine they just say "every exchange that happened between these hours of unclear possible-error are invalidated. Everyone gets the number of shares back."

The exchanges can do this after all, they are the ones who are exchanging the shares and can credit/debit said shares from accounts.

That's not my question. What happens to all the trades based on pre-cancellation information but not included in the cancellation? There were several hours of trades that were not cancelled and they were based on pre-cancellation data.

edit: From GGT's post above,

Who's going to trade in the future if you go to bed with a big profit and wake up with a loss?

[GGT]

Yep, that's the danger of e-trading and those 'dark pools' we read about. The confidence factor is a real problem, no wonder retail investors and smaller money managers get the feeling the game is rigged against them. Because it is. There are many articles about Wall St needing to repair its reputation, so pension funds and retirement plans don't rush out. Beware the Quants is a common theme. They may make money on rapid massive trades, but it doesn't really add Value to real securities, and it's actually distorting pricing and liquidity.


adding an update:

SEC Said to Consider New Rules as It Investigates Market Plunge

By Jesse Westbrook


May 8 (Bloomberg) -- The U.S. Securities and Exchange Commission is considering regulatory changes aimed at slowing stock trading during periods of cascading prices, even though the agency hasn’t yet concluded what caused this week’s market plunge, two people familiar with the matter said.

SEC officials are weighing whether uniform trading curbs should be imposed across markets for companies that have fallen a certain percentage, said the people, who declined to be identified because the discussions are preliminary. The agency is examining whether any rules should include a time element because a steep decline that occurs in minutes may be more detrimental to markets than a decline over several hours, one of the people said.

U.S. regulators and exchanges are trying to determine what happened after stocks fell May 6, temporarily erasing more than $1 trillion in market value, in a rout fueled by waves of computerized trading. The SEC and Commodity Futures Trading Commission said in a joint statement yesterday that declines for individual stocks were “inconsistent” with well-functioning markets and pledged to make “structural” changes if necessary.

SEC spokesman John Nester declined to comment on internal agency discussions. Lawmakers are pressing the SEC for answers.

“Yesterday’s flash crash was incredibly startling,” Representative Paul Kanjorski said in a statement, announcing a May 11 hearing to examine the incident. “We cannot allow technological problems, regulatory loopholes, or human blunders to spook the markets and cause panic.”

Computer Glitch

Kanjorski, a Pennsylvania Democrat, also sent a letter to SEC Chairman Mary Schapiro seeking the agency’s views on the incident and asking what power it has to prevent future crashes.

While the SEC is in the early stages of reviewing market data, the agency hasn’t found evidence indicating that an erroneous trade or a computer glitch triggered the market rout, one of the people said.

CNBC citied “multiple sources” in reporting May 6 that New York-based Citigroup Inc. may have made a mistake in entering a transaction that contributed to the plunge. Citigroup said it found no evidence it was involved in an erroneous trade, a finding supported by futures market CME Group Inc.

SEC officials have internally circulated at least two memos outlining market mechanisms suspected of triggering or fueling the market decline, a person familiar with the discussions said.

Washington Briefing

One memo, circulated two days ago, outlines a scenario described publicly by stock-exchange officials, people who saw the document said. The theory advanced by the other memo couldn’t be determined.

SEC commissioners were scheduled to be briefed on the incident yesterday by the agency’s trading and markets division in Washington, the people said.

One SEC memo, according to people who saw it, discusses a theory raised yesterday by NYSE Euronext spokesman Ray Pellecchia, who said sudden price moves in multiple stocks reached so-called liquidity replenishment points. That prompted the exchange to slow trading in those shares as it tried to ensure an orderly market. Such incidences allow other exchanges to ignore NYSE price quotes.

Trades sent to electronic networks then fueled the drop, said Larry Leibowitz, chief operating officer of NYSE Euronext. While the first half of the Dow Jones Industrial Average’s 998.5-point plunge probably reflected normal trading, the decline snowballed as orders went to venues lacking liquidity to match them, he said in an interview yesterday.

Uniform Practices

NYSE competitors such as Nasdaq OMX Group Inc. don’t use liquidity replenishment points. The SEC and CFTC in their joint statement raised concerns that the plunge may have been caused by exchanges not adhering to uniform practices.

“We are scrutinizing the extent to which disparate trading conventions and rules across markets may have contributed to the spike in volatility,” the regulators said. Ideas under discussion would make sure all trading platforms follow the same policies when prices fall precipitously.

A circuit breaker for individual stocks across all markets would avoid the problem of individual markets making their own decisions about trading, said Brett Mock, chairman of the Security Traders Association, a trade group of brokers and asset management companies based in Darien, Connecticut.

The SEC and CFTC said their market oversight units are continuing to review trading data and will make findings public. The SEC’s enforcement division, which investigates violations of securities rules, will also try to determine if market participants exploited the turmoil to profit illegally, two people with direct knowledge of the matter said.

Increased Competition

Increasing competition has eroded NYSE and Nasdaq’s trading volume. Less than 30 percent of transactions in NYSE and Nasdaq listed companies takes place on their networks with orders dispersed to as many as 50 venues. Most rival platforms are fully electronic.

Lawmakers including U.S. Senator Ted Kaufman, a Delaware Democrat, have urged the SEC since last year to increase regulation of markets that rely on computer algorithms to execute thousands of trades in seconds. Kaufman, who has raised concerns about potential manipulation or false trades triggering a crisis, urged the SEC this week to step up its oversight.

“No one knows what is happening in the exchanges when this trading is going on,” he said on the Senate floor May 6 after the market plunge. “All we have been requesting from the Securities and Exchange Commission is that they take a look at what is happening.”

http://www.bloomberg.com/apps/news?p...d=aXqj4aOeeQ6A

See folks, no big deal, happens all the time. Cain says so.

[EyeKhan]

You monkeys aren't listening. Our Civilization is a house of cards and the wind is picking up.

[GGT]

You monkeys aren't listening. Our Civilization is a house of cards and the wind is picking up.

Patience, grasshopper. The recession is over, jobs are coming back. Consumers are spending again. Kiss your children and go shopping!

[CitizenCain]

http://www.bloomberg.com/apps/news?p...d=aXqj4aOeeQ6A

See folks, no big deal, happens all the time. Cain says so.

"Government agency asked to look into clusterfuck" is now proof of... what, exactly?

[GGT]

"Government agency asked to look into clusterfuck" is now proof of... what, exactly?

Why are you still here? You made your opinion perfectly clear---this happens all the time, it's no big deal, some fat finger dude from Citi did it by typing b instead of m..


For anyone else interested in following the clusterfuck and other peoples' opinions:

ON Thursday afternoon, the Dow plunged 1,000 points within a few minutes, followed by an equally sudden recovery. We don’t know all the details about the drop, but it was almost certainly the result of computer or human error in a high-speed trading program.

Among the many arcane corners of the financial world highlighted by the Wall Street crisis, high-frequency trading — in which computers scan billions of bits of market data for trading opportunities that may exist for mere fractions of a second — has generated a surprising amount of discussion. Alongside the risk of expensive errors like what happened Thursday, critics say, these programs facilitate insider trading and overwhelm regulators’ access to critical information.

These are fair criticisms. Fortunately, they can also be easily addressed without undermining the positive role that high-frequency trading plays in the market.

Let’s start with the insider trading charge. Often, when an exchange operator receives an investor order and finds that another exchange has a better price, it will “flash” the order to a few select traders in its exchange a split second before sending it to market, giving those traders an opportunity to improve their price, too. When used properly, flashing ensures that investors trade at the best available prices.

But that hair’s breadth of time also gives high-frequency traders an opportunity to make a tidy profit off what amounts to insider information. How? Rather than improve their price, the recipient of a flash can go to the other exchange, buy up all the assets at better prices, and force the original investor to trade with them at an inferior price.

We don’t allow trading based on private knowledge of pending business deals or court rulings, and we shouldn’t allow it in high-frequency trading, either. But that doesn’t mean we should ban flashing all together. Instead, to deter abuse, anyone who gets a preview of a trade, whether by phone or flash, should be required to register with an exchange and keep records of every negotiation.

A trickier problem lies with the software that handles the trades. Heavy use of any software will magnify even the smallest flaw — and when it comes to high-frequency trading, a tiny flaw can put millions of dollars at risk before anyone notices.

One plausible explanation for Thursday’s 16-minute crash and recovery, for example, is that computers programmed to sell when prices hit a certain level did so en masse, prompting yet other computers to do the same, until the prices of some stocks were pushed down to nearly zero. Then other computers, recognizing these as extraordinarily unreasonable prices, began buying them up with equal relish.

Indeed, the rapid development of automated-trading software and the maddening complexity of even the most simple systems make the introduction of technological errors inevitable. While it’s true that electronic exchanges require trading software to be certified before it is used, there is no market-wide standard for testing the software and nothing to effectively stop a firm from trading with uncertified software.

Financial regulators should take a page from the Federal Aviation Administration and the National Transportation Safety Board and develop quality standards for trading software, as well as investigatory procedures that would allow the industry to learn from episodes like Thursday’s.

Finally, the Securities and Exchange Commission needs better access to the fire hose of data hitting the market each day. Because a great number of trades go through middlemen, regulators have no easy way of even knowing who the high-frequency traders are. With millions of trades made every day, this administrative hurdle means traders are essentially anonymous to regulators.

This opacity allows firms to reap benefits intended for nonprofessional investors. Many exchanges, for example, have rules that require them to fill orders from retail investors before those from pros. Anonymity allows professionals to masquerade as amateur investors and thus get their trades in faster.

But there’s an easy solution here as well: the Securities and Exchange Commission should require that everyone who originates a trade be identified. The commission is reported to be working on just such a rule, and it can’t come soon enough. Otherwise, it’s akin to asking someone to officiate a football game wearing a blindfold.

Like the autopilots that control most airplanes nowadays, high-frequency trading is more beneficial than harmful. It automates the routine elements of a complicated and high-risk mission, reducing the likelihood of human error. But costly errors will still happen, and some traders will bend the rules beyond the breaking point. We need reforms that actually address the risks of high-frequency trading and facilitate the restoration of public confidence in the markets.

Michael Durbin, the author of the forthcoming “All About High-Frequency Trading,” helped develop high-frequency trading systems for two investment firms.

[CitizenCain]

Why are you still here?

Because you're still spewing misinformation like a geyser. And you kinda summoned me, by implying that a bunch of panicky retards asking for a government investigation somehow invalidated my statements. Get enough panicky retards together and they can get congress to legislate the value of pi. (Yes, it's actually been tried in this country.)

And frankly, from your own source - ON Thursday afternoon, the Dow plunged 1,000 points within a few minutes, followed by an equally sudden recovery.

OH MY ASS-FUCKING GOD IN HEAVEN, IT'S A CATASTROPHE, BECAUSE EVERYTHING'S BACK TO THE WAY IT WAS!!!!!!!!!111 RUN FOR THE HILLS, BEFORE THE STOCK RECOVERY SKULL-FUCKS ALL YOUR CHILDREN AND EATS THE FAMILY DOG!!!!!!111111





Like I said, no big deal - it's already [re]normalized itself, and no one but you is still running around like a headless chicken, screaming about impending doom, or hypervisors cheating us of teh stock w00tage, or conspiring kernels run amuck.

[Dreadnaught]

Dark pools? What the hell does this have to do with that?

[CitizenCain]

Zionists using evil computer programs to get more j00-gold and enslave us all, I think.

Either that penises.

There ya go. J00 gold or penises... definitely one of the two... unless it's both. What if someone is sticking his penis into the j00 gold?!?!?!?

[Being]

When trades are changed after several hours of trading has taken place based on the unchanged data, market credibility is lost. Faith in the system is lost.

[Dreadnaught]

When electronic glitches make people forfeit securities they didn't really mean to sell, there's also a loss of faith. There's a thing called a stop-loss order. Many brokers have pre-set instructions on their securities to sell if the price goes below a certain point.

It's the "oh fuck" point -- if one of their securities suddenly lose a ton of value (IE the company has something catastrophic happen ), the stocks are automatically sold so the investor can get at least some of their money out.

In the case of Thursday, there were a ton of stocks that lost outlandish amounts of value in a six minute period for no clear reason. This triggered a lot of automated stop loss orders, which led to further selling by people who probably didn't mean to part ways with stocks.

Of course, there are also similar orders out to buy if a stock goes below a certain level.

The bottom line is a likely glitch like this triggers the sprinkler systems when there isn't really a fire. The exchanges are putting the water back in the tanks so that they can solve what happened and people can move on.

[CitizenCain]

And frankly, since this policy of reserving the right to reverse trades is part of the their ToS, so the "loss of faith" argument is being widely blown out of proportion - this isn't actually, a surprise to anyone who knows anything. And, like Dread pointed out, it would be worse ("faith"-wise) if millions of people lost a bunch of money in the stock market because of some twit's fat finger and their stop-loss order.

Not to mention that there's a reason the NYSE has these (and other rules) around trading during high volatility in the first place - if they didn't, it would be *very* easy to game the system, thus, would create an incentive to provoke volatility in the stock market, and generally be much worse in the "faith in the system" department than revoking a bunch of trades that everyone acknowledges were made "erroneously" (or as a consequence of the volatility introduced by the original, erroneous order).

[Being]

When electronic glitches make people forfeit securities they didn't really mean to sell, there's also a loss of faith.

Exactly. Trading should have been stopped as soon as the glitch is discovered, not a day later after millions more trades have been made on data that is invalid. My point is that although the data might be corrected for some it has become incorrect for many more than it was made correct. It's like the black jack dealer throwing them a 21 and then replacing the ace with a 6, "Sorry, that ace was a glitch".

And frankly, since this policy of reserving the right to reverse trades is part of the their ToS, so the "loss of faith" argument is being widely blown out of proportion - this isn't actually, a surprise to anyone who knows anything. And, like Dread pointed out, it would be worse ("faith"-wise) if millions of people lost a bunch of money in the stock market because of some twit's fat finger and their stop-loss order.

Not to mention that there's a reason the NYSE has these (and other rules) around trading during high volatility in the first place - if they didn't, it would be *very* easy to game the system, thus, would create an incentive to provoke volatility in the stock market, and generally be much worse in the "faith in the system" department than revoking a bunch of trades that everyone acknowledges were made "erroneously" (or as a consequence of the volatility introduced by the original, erroneous order).

You know many experts are blaming NYSE's slowing trading for precipitating this, right?