Thursday, May 6, 2010

Nasdaq cancels today's trades that moved more than 60%

The Nasdaq OMX Group Inc has announced that it will cancel all trades occurring between 2:40 and 3:00PM eastern time that were more than 60 percent above or below trading prices immediately preceding today's collapse in the U.S. equities markets.  From Business Week (photo: Reuters):
Nasdaq OMX Group Inc. said it will cancel stock trades on all exchanges that were more than 60 percent above or below prices at 2:40 p.m. New York time, just before U.S. equities plummeted.

The Dow Jones Industrial Average plunged almost 1,000 points before trimming its drop and ended down 347.80 points, or 3.2 percent, at 10,520.32. About $700 billion of U.S. stock- market value was wiped out in less than 10 minutes, according to data compiled by Bloomberg.

Nasdaq, which investigated trades between 2:40 p.m. and 3 p.m., said it will provide a list of stocks affected and the prices at which the trades will be canceled. Citigroup Inc. may have been the company that made a potential erroneous trade, CNBC reported, citing “multiple sources.” The New York-based bank said it found “no evidence” of erroneous trades, and CME Group Inc. said that Citigroup’s activity in CME stock index futures markets didn’t appear to be “irregular or unusual.”

“Somebody hits the wrong button and everybody heads through the same door at the same time,” said David Goerz, who oversees $17 billion as chief investment officer at Highmark Capital Management in San Francisco. “It clearly was a factor. When you have a lot of skepticism and nervousness in the market place, that just exacerbates the problem.”
The period in question saw stock prices for 27 U.S. stocks with at least $50 million in market value fall by more than 90 percent as U.S. equities tumbled, before recovering by the close, according to Bloomberg data excluding exchange-traded funds.

CNBC reports that 8 stocks were traded down to one penny or zero including Exelon (NYSE:EXC), Accenture (NYSE:ACN), CenterPoint Energy (NYSE:CNP), Eagle Material (NYSE:EXP), Genpact Ltd (G), ITC Holdings (NYSE:ITC), Brown & Brown (NYSE:BRO), Casey’s General (NASDAQ:CASY) and Boston Beer (NYSE:SAM).

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