http://www.zerohedge.com/article/todays-flash-crash-75-loss-10-billion-market-cap-company-one-second
If you can’t get the article up instantly, try refreshing a couple times. The charts are hilarious even though I barely grasp what each element represents.
Sorry, the article says something about NYSE cancelling the “bad trades”. I don’t understand.
Basically, the problem was due to an algorithm doing something not expected/wanted. So the NYSE reversed all the trades because of it.
Why would the NYSE, which my limited knowledge tells me is a private entity, “bail out” a company for making legitimate errors?
Because they agreed to some terms to be part of the NYSE?
Valiant regulators regularly barge in and cancel free market trades at will, then worry about no one trading (drying liquidity) when markets crash. For an arbitrageur, hedging and risk management becomes impossible if any leg of his arbitrage could be retroactively cancelled by a bumbling bureaucrat. Next, the regulators are going to impose mandatory market participation at all times as a solution, whereas if they only left the market alone (i.e. allowed superior agents to earn a profit by punishing inferior ones for their mistakes) no regulation and imposition would be needed. So idiotic. So typical.
z, do you realize that the so-called regulators in this context was the NYSE’s own employees, right? The NYSE is a company in its own right where corporations agree to certain terms to be listed on their index. You seem to be pulling out rhetoric that doesn’t apply in any way to the situation as discussed in the article.
ladyattis, the private/public rule/regulation boundary is practically non-existent in the case of securities exchanges.
http://www.nyse.com/regulation/nyse/1145313073247.html
“NYSE Regulation, Inc., is a not-for-profit corporation dedicated to strengthening market integrity and investor protection. In addition to its regulatory responsibilities to enforce marketplace rules and federal securities laws of the New York Stock Exchange, NYSE Regulation oversees NYSE Arca Regulation and NYSE Amex Regulation through regulatory services agreements.”
If NYSE was a company allowed to enforce its own rules (without regulator’s imposition) they’d probably be much more careful about cancelling client’s trades retroactively. As I explained above, such a policy is deadly for liquidity, and they’d lose business to competitors who don’t have such idiocies in their rule-book. “Strangely” no such competitors exist.
That still doesn’t refute my point. If you don’t like the NYSE’s rules, then don’t trade on it. Don’t be butthurt if they reverse a trade.
That’s exactly what happens. Agents are reluctant to trade (act on arbitrage opportunities) when chances increase that their trades may get arbitrarily cancelled, which is exactly when nyse/regulators are complaining that liquidity (market participation) dries out. A perfect example of “protective” rules/regulation achieving the complete opposite of the desired effect.