Stock sell-off a human error?

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In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses—all apparently due to a trader error. 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. Sources tell CNBC the erroneous trade may have been made at Citigroup.

 

"We, along with the rest of the financial industry, are investigating to find the source of today's market volatility," Citigroup said in a statement. "At this point we have no evidence that Citi was involved in any erroneous transaction."

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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.

Oooops

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Go-slow on fast trading slowed Canada market rout

 

Slower moves to faster trades muted Canadian pain during Thursday's stock market meltdown, but regulators will still have to examine if markets have sufficient safeguards against this sort of disruptive move.

 

Toronto's resource-heavy index fell 3.8 percent in Thursday's moment of madness, while U.S. stocks tumbled 9 percent.

 

And the fact that high frequency trading, which uses sophisticated computer algorithms to automate transactions at speeds in the millionths of a second, makes up a far smaller share of Canada's overall market volume than it does in the United States, was probably a reason for the slower slide.

 

"It certainly is a concern and is going to require the regulators down there to really look at how vulnerable the market is to one client segment running black box trading strategies," said Greg Mills, managing director of global equity sales and trading at RBC Capital Markets.

 

High frequency trading accounts for an estimated two-thirds of U.S. equity volume, and 20-30 percent of Canadian volume.

 

Industry and regulators were still scrambling on Friday to pinpoint the cause for the sell-off. But growing concern about Europe's debt crisis, plus talk of at least one large erroneous trade are seen as key factors.

 

But the plunge altered the behavior of high frequency traders, and that likely contributed to the rout, Mills said.

 

"It's a domino effect of a series of events that took place and it really highlights how fragile the market is right now," he said.

 

"Part of the fragility of the market is because we've got market participants today running highly sophisticated electronic trading strategies that can immediately ... withdraw their participation. The result was to dry up liquidity in the market place."

 

U.S. President Barack Obama said U.S. authorities were investigating the cause of the market rout and stock exchange operator Nasdaq OMX Group Inc said it will cancel trades for hundreds of stocks.

 

Canada's IIROC regulator canceled or repriced some 220 trades in four separate securities, and said it was monitoring trading closely on all Canadian equity market places.

 

The TMX Group , which operates the Toronto Stock Exchange and the TSX Venture Exchange, was not immediately available to comment.

 

"If the speculation was this was a computer, algo, high-frequency problem the effect was probably more serious in the States because there's a greater amount of algo, computer-driven traffic," said Bruce Latimer, a trader at Dundee Securities.

 

"The whole system is clearly going to have to be looked at and either regulations introduced or take a look at the ones we have and see if they are adequate. Things like that shouldn't happen."

 

Source

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FINDINGS REGARDING THE MARKET EVENTS OF MAY 6, 2010