The Trade That Crashed the Market (Some ones loosing their job)

m.c.trader's picture
Rank: Orangutan | 315

Here's likely the trade that caused the 10% plummet in the dow today, the chart shows ACN (Accenture) Going from 42US dollars to .01 cent in a manner of minutes.

What will DC say about this latest blunder by wall street? One that was likely compounded by some Black Box news Algo's out there.

Enjoy

Comments (36)

May 6, 2010

You could have made a killing today

May 6, 2010

its also really funny that all of the news agencies were blaming Greece for the downturn in the Dow

May 6, 2010

If you were an average investor sitting at your Limit Order PA and owned Accenture, you obviously happened to see this and had....say 1,000 dollars in cash ready for trading:

You buy 100,000 shares of ACN, a company you know well and know is not worth a penny.

10 Minutes later when the stock gets back to 40$ you sell all 100,000 shares.

You broker deposits 4 MM in your account.

If you had $10,000 you could have retired off of 5 minutes of trading. God bless everyone who made billions off this mistake, and happy retirement.

May 6, 2010

^ No way you could have gotten execution on that trade.

May 6, 2010
drexelalum11:

^ No way you could have gotten execution on that trade.

yeah, no way.....

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May 6, 2010
GekkotheGreat:
drexelalum11:

^ No way you could have gotten execution on that trade.

yeah, no way.....

Yap no way, even though it did go through they would have be cancelled, read article
http://www.bloomberg.com/apps/news?pid=20601087&si...

May 6, 2010

Don't they have an obligation to the buyer to execute the trade, especially if it is their system that screwed up?

If the shares are available, those 19 people should have gotten their 100. Unless they were canceled due to the fact that there was no sellers at .01$ but if that was the case then that rogue 100 shares wouldn't have been executed.

Somebody or something was dumping ACN under .04$ and the shares were available.

1) Stop Loss orders on PAs

2) Program trading at a HF.

So is the the argument that those people didn't really "mean" to sell ACN? And that's why the trades were cancelled?

What about the people who did mean to sell it?

May 6, 2010

haha, even if you did, and put the order in a timely fashion, the specialist on ACN on the floor of NYSE will absolutely front-run you...

May 6, 2010
GekkotheGreat:

haha, even if you did, and put the order in a timely fashion, the specialist on ACN on the floor of NYSE will absolutely front-run you...

I thought that front running was illegal... so how would he do this? Does it really happen that much?

I read the article that said trades would be canceled if the value moved more than 60%, but I don't understand why they would do that. Will someone explain? I don't think they should cancel trades because someone took advantage of another's mistake...

    • 1
May 6, 2010
quartz:
GekkotheGreat:

haha, even if you did, and put the order in a timely fashion, the specialist on ACN on the floor of NYSE will absolutely front-run you...

I thought that front running was illegal... so how would he do this? Does it really happen that much?

I read the article that said trades would be canceled if the value moved more than 60%, but I don't understand why they would do that. Will someone explain? I don't think they should cancel trades because someone took advantage of another's mistake...

The best example is the stop-loss trader who doesn't work in finance, has a PA worth a couple grand.

Say he owns 400 Shares of ACN, well something blows up the market (I have a feeling with all the tight-lippedness that it was someone internally on the NYSE that screwed up the quote system) and his trailing stop-loss triggers a sell of all 400 shares.

Problem is by the time it hits the tape the bid ask spread is .04/.01.

So while he was out eaten Chinese food with his co-workers talking about TPS reports, his 400 shares of ACN worth 16,000 Dollars that he bought 10 years ago in college because his buddy's dad worked there have now been sold for 4 dollars.

Now he can't buy that new Saturn he's had his eye on.

Now you see why it's fair that the trades are cancelled. There is a post above mine with an Erroneous trade Cancellation Link for the Nasdaq rules and regs.

May 6, 2010
May 6, 2010

Dare I say it, the Quants will do us in! Seems like that book was right ...

Taleb must be so happy right now. Black Swans are everywhere.

May 6, 2010

Taleb is right about most "quants" who really know little about pure math in the first place.

It's easy to be skeptical of a system that a values extremely complex, interrelated, credit risk based on normal distributions.

People's actions can't be described with statistics, I mean people are literally bending math to fit certain models and they will tell you that is what they are doing.

Though I doubt this is a black swan, it sounds like we will find out that something actually caused this and it wasn't an anomaly.

May 6, 2010

nasdaq already announced they're busting these trades.

the question is not if quants are predicting things properly, but if they're doing a better job than others who are doing it in a more qualitative fashion. nonetheless, i think we can all agree that there is too much faith placed in many models.

May 6, 2010

anyone has the name of the trader that fucked up?

May 6, 2010
bunkerbanker:

anyone has the name of the trader that fucked up?

All that's been released so far is this:

http://www.reuters.com/article/idUSTRE6456QB20100506
I.e. no one traders been accused of anything yet.

May 6, 2010

^he is going to get lynched

May 6, 2010

Citigroup, lol.

May 6, 2010

fyi you can look up the volume traded at $0.01 pretty easily. some 27k shares were crossed at that level so someone turned a $270 investment into 1.1mm and change in 5 mins. Too bad it's getting wiped out.

May 6, 2010

Wtf no way traders actually caused this one? I've heard the Citi rumors, but unless some schmuck accidentally shorted half a dozen stocks and tacked on three 0's (multiple ones dropped more than 95%)...

If that actually happened that dude is set for life. Write a book, donezo.

May 7, 2010

Thanks m.c.trader. Although I am more convinced by the rules and regulations that existed beforehand, I get the point either way.

May 7, 2010

It's true...all of the trades that were done on the Nasdaq between 2:40 and 3:00pm are being cancelled. Unfortunate for someone like me that made some serious cash during that shit-storm.

So, class, what did we learn? If this ever happens again, the move is to put on every liquid proxy trade for risk in the market. Equities are tanking? Can anyone explain why? Who cares--sell EUR/JPY, buy USD/TRY, buy USD/ZAR, sell all commodities except for gold, put on a USD yield curve steepener, buy vol in any market, and short the Baltic Dry Shipping Index. And after the equity markets have CALMED THE FUCK DOWN, reverse all of your positions, and walk over to the head of trading with your cock out. He'll be expecting you.

May 7, 2010

m.c. trader you are an idiot. learn something before posting shit

May 7, 2010
feenans:

m.c. trader you are an idiot. learn something before posting shit

+1

In all seriousness, which one of my many posts are you referring to?

May 7, 2010

"put on a USD yield curve steepener, "

curve flattened yday....

May 7, 2010

Anyone hear any good jokes coming out of all this?

May 7, 2010

So what happens to guys who bought equity low on Nasdaq between 2:40 and 3 and sold after 3. Their purchase would be cancelled but they'd get saddled with the sale.

May 7, 2010
Crease:

So what happens to guys who bought equity low on Nasdaq between 2:40 and 3 and sold after 3. Their purchase would be cancelled but they'd get saddled with the sale.

The full list of stocks effected are on Reuters and other websites, I'd say its a list of about....200 names?

SOme of the big players that also dipped aren't on there because their swing wasn't >60%

Google and AAPL both dropped way under value, I think GOOG got to 400 and AAPL got close to 200.

So those buyers would be okay.

And I would imagine that a commercial broker like TDAmeritrade would say "Sorry can't help you were keeping your ten bucks"

Where as institutional traders at BBs and firms may say, no worries, you get your .05$ a share back or whatever it was.

^ Those traders have to worry about client relations, big brokers aren't going to worry too much over a 7-10 dollar trading fee because really it's not their fault you placed the buy and nor is it your fault. I would imagine there is some fine print out there on this.

May 7, 2010

FYI, NYSE glitched on Wednesday and was missing 7 minutes of quotes for a couple hundred securities. Accenture wasn't one of them, but it seems like stuff was on the fritz even before yesterday.

May 7, 2010
GoodBread:

FYI, NYSE glitched on Wednesday and was missing 7 minutes of quotes for a couple hundred securities. Accenture wasn't one of them, but it seems like stuff was on the fritz even before yesterday.

That blows my mind, everyone's talking about P&G because its a house hold name, but what about this accenture Anomaly?

I mean, they're a liquid stock on a major market, 40 --> .01 can't happen that quick.

It's kinda mysterious watching it all unfold.

May 7, 2010
GoodBread:

FYI, NYSE glitched on Wednesday and was missing 7 minutes of quotes for a couple hundred securities. Accenture wasn't one of them, but it seems like stuff was on the fritz even before yesterday.

NYSE has system problems with amazing frequency, actually, it's just the the other exchanges usually have enough liquidity that it doesn't matter.

May 7, 2010

the fun continues... someone put up another penny print in NWPX today, at 10:41

May 7, 2010
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May 10, 2010
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