Thursday, May 6, 2010

There's sumthin' fishy goin' on (NASDAQ)

I was watching my charts quite closely from well in advance of the decline. A (wonderfully) monstrous day for trading in my view. I'm certainly not a long time "weathered" trader, but the various stories that came out discussing the fundamentals behind the monstrosity moves and volatility, all gave me a sense of contrived. Searching deep for answers. I expect that there were a variety of actions that combined to have the gigantor effect. Now the rebound is even more interesting to me. The rebounds were equally as violent and vicious. I cannot imagine all the folks that got caught sideways or upside down on this. For all those winners, there is always the "other" side of the trade.

3rd UPDATE: Exchanges, SEC Determining Which Trades To Honor

(Updates with detail on broken trades)

By Jacob Bunge

Of DOW JONES NEWSWIRES

Nasdaq OMX Group Inc. (NDAQ) said late Thursday that it would cancel trades involving 267 U.S.-listed securities in the aftermath of the day's market chaos, though said it had no "no technology or system issues."

The announcement came after representatives of major U.S. exchanges and the Securities and Exchange Commission convened a series of conference calls late Thursday to determine which trades will be voided.

A notice from Nasdaq OMX Group Inc. Thursday evening said that the exchange was working with other markets to cancel all trades executed at prices that were greater than or less than 60% away from the last printed price prior to 2:40 p.m. EDT.

The cancellations will affect trades made between 2:40 p.m. and 3:00 p.m. EDT, and the decisions aren't able to be appealed, according to the notice. "There is no indication at this time that a Nasdaq market participant experienced a technological failure in connection with this event," said the company in a notice. "There is also no indication that any member firm had a trade error on any NASDAQ OMX system."

The U.S. exchange arms of BATS, NYSE Euronext (NYX) and Direct Edge made similar moves.

Exchanges and regulators debated which trades ought to be honored following a dramatic selloff in stocks Thursday, said to be triggered by an erroneous trade in electronic futures on the S&P 500 stock index.

"It's a coordinated effort to determine which trades to honor," said a person involved in the discussions.

The move would let traders break up trades in stocks whose prices plunged to pennies at the height of Thursday's market chaos, when the Dow Jones Industrial Average at one point was down by nearly 1,000 points.

Initial plans called for exchanges to void trades taking place in that period of time at prices more than 30% below or above the pre-2:40 p.m. time period, according to a person briefed on the discussions. This was later amended to the 60% level. A full list of the affected securities can be found at:

http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2010-30

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

(Doug Cameron contributed to this article)

(END) Dow Jones Newswires
  05-06-102229ET
  Copyright (c) 2010 Dow Jones & Company, Inc.

Tahoe is Walking On

Thursday, May 6, 2010

There's sumthin' fishy goin' on (NASDAQ)

3rd UPDATE: Exchanges, SEC Determining Which Trades To Honor

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