http://smart-ticker.com/index.php/forums/viewthread/124
A brief description of a possible blowup with ISO order types from Nasdaq going into the NYSE then getting rerouted (becaue they went slow market) to other markets and sweeping the top of their quotes then trading thru (remember Reg NMS that everyone wanted) till the stock hit zero. Now BATS and NASDAQ are complaining it is NYSEâs fault which in fact their own markets crashed the world not the NYSE. NYSE had protection on and the otherâs didnât. In the next few weeks we will all see the blaming gameâ¦.from dumb assâs in Washington to exchanges bitching.
WSJ
By TOM LAURICELLA, SCOTT PATTERSON And CAROLYN CUI
A review of trading logs and interviews with traders suggests an outline of how a large but somewhat routine selloff spiraled out of control.
For a good part of the day, markets were down on worries about debt woes in Europe and unrest in Greece.
Shortly after 2 p.m., traders on the floor of the NYSE say, they noticed some wild moves in currency markets, and gold was ticking up. Stocks fell further.
Around 2:40 p.m., with the Dow Industrials down about 500 points, a big high-speed trading firm, Tradebot Systems Inc., stopped trading to limit its losses. Other high-speed firms also pulled back. These firms typically buy and sell when other investors need to trade, so their withdrawal could have primed the market for a fall.
Around the same time, the big P&G sell order hit the NYSE floor. It is not clear where the sell order came from and how big the order was. It overwhelmed available buy orders, traders say.
Because that order came amid the market selloff, a NYSE system kicked in thatâs designed to slow trading when thereâs a big move in a stockâs price or trading volume. That so-called liquidity replenishment point system stopped the NYSEâs electronic trading in some stocks, down-shifting into âslowâ mode.
The system is supposed to allow designated market makersâhuman traders who work on the floorâto help bring order to the market. These traders are required to step in and buy or sell stocks when there are no other investors willing to make the trades.
Journal Community
Starting at 2:45 and 52 seconds and continuing for nearly two minutesâan eternity in markets where millions of shares trade every secondâno P&G trades were reported by NYSE. For about 80 seconds, not a single share of P&G stock traded through the Big Board.
Sell orders continued to flood into the NYSE. When the orders couldnât be filled, they spilled into other electronic trading venues.
That created an overload of sell orders and caused temporary divergences in prices between stocks on the NYSE and other exchanges. Essentially, there were no buyers for many stocks, which allowed their prices to fall until a trade was done, in some cases to 1 cent.
During that time, P&G declined 35%, then began to rebound. At 2:47 and 42 seconds, the NYSE reported a new P&G trade at $56.27, just below where the stock was changing hands before the trading halt.
Meanwhile, the broad market was falling more than 100 points a minute.
âWe were here and didnât know what happened out there,â said Doreen M. Mogavero, president of Mogavero, Lee & Co., a floor broker. âWe thought something horrific happened.â
Some traders say one culprit for the quick downdraft might have been a type of trade called an âintermarket sweep order,â or ISO. ISOs, which some studies say account for nearly half of all trades, send trades to whatever exchange that has the best price. The order can remain there until it is filledâeven if that means the price falls to near zero.
A large number of stocks that plunged dramatically Thursday were ISO orders in which there were no apparent buyers, data shows.
Shares of consulting firm Accenture PLC fell from $41 at 2:30 p.m. to $32.62 at 2:47:46 when a trade was routed through NYSE Arca Exchange. Seconds later, at 2:47:50 p.m. an ISO trade cleared through Nasdaq at $5.54. Moments later, an ISO trade went through on Nasdaq at $3.04. The shares traded at a penny at 2:47:53 p.m.
http://online.wsj.com/article/SB100...732737716.html?mod=WSJ_hpp_LEADNewsCollection
A brief description of a possible blowup with ISO order types from Nasdaq going into the NYSE then getting rerouted (becaue they went slow market) to other markets and sweeping the top of their quotes then trading thru (remember Reg NMS that everyone wanted) till the stock hit zero. Now BATS and NASDAQ are complaining it is NYSEâs fault which in fact their own markets crashed the world not the NYSE. NYSE had protection on and the otherâs didnât. In the next few weeks we will all see the blaming gameâ¦.from dumb assâs in Washington to exchanges bitching.
WSJ
By TOM LAURICELLA, SCOTT PATTERSON And CAROLYN CUI
A review of trading logs and interviews with traders suggests an outline of how a large but somewhat routine selloff spiraled out of control.
For a good part of the day, markets were down on worries about debt woes in Europe and unrest in Greece.
Shortly after 2 p.m., traders on the floor of the NYSE say, they noticed some wild moves in currency markets, and gold was ticking up. Stocks fell further.
Around 2:40 p.m., with the Dow Industrials down about 500 points, a big high-speed trading firm, Tradebot Systems Inc., stopped trading to limit its losses. Other high-speed firms also pulled back. These firms typically buy and sell when other investors need to trade, so their withdrawal could have primed the market for a fall.
Around the same time, the big P&G sell order hit the NYSE floor. It is not clear where the sell order came from and how big the order was. It overwhelmed available buy orders, traders say.
Because that order came amid the market selloff, a NYSE system kicked in thatâs designed to slow trading when thereâs a big move in a stockâs price or trading volume. That so-called liquidity replenishment point system stopped the NYSEâs electronic trading in some stocks, down-shifting into âslowâ mode.
The system is supposed to allow designated market makersâhuman traders who work on the floorâto help bring order to the market. These traders are required to step in and buy or sell stocks when there are no other investors willing to make the trades.
Journal Community
Starting at 2:45 and 52 seconds and continuing for nearly two minutesâan eternity in markets where millions of shares trade every secondâno P&G trades were reported by NYSE. For about 80 seconds, not a single share of P&G stock traded through the Big Board.
Sell orders continued to flood into the NYSE. When the orders couldnât be filled, they spilled into other electronic trading venues.
That created an overload of sell orders and caused temporary divergences in prices between stocks on the NYSE and other exchanges. Essentially, there were no buyers for many stocks, which allowed their prices to fall until a trade was done, in some cases to 1 cent.
During that time, P&G declined 35%, then began to rebound. At 2:47 and 42 seconds, the NYSE reported a new P&G trade at $56.27, just below where the stock was changing hands before the trading halt.
Meanwhile, the broad market was falling more than 100 points a minute.
âWe were here and didnât know what happened out there,â said Doreen M. Mogavero, president of Mogavero, Lee & Co., a floor broker. âWe thought something horrific happened.â
Some traders say one culprit for the quick downdraft might have been a type of trade called an âintermarket sweep order,â or ISO. ISOs, which some studies say account for nearly half of all trades, send trades to whatever exchange that has the best price. The order can remain there until it is filledâeven if that means the price falls to near zero.
A large number of stocks that plunged dramatically Thursday were ISO orders in which there were no apparent buyers, data shows.
Shares of consulting firm Accenture PLC fell from $41 at 2:30 p.m. to $32.62 at 2:47:46 when a trade was routed through NYSE Arca Exchange. Seconds later, at 2:47:50 p.m. an ISO trade cleared through Nasdaq at $5.54. Moments later, an ISO trade went through on Nasdaq at $3.04. The shares traded at a penny at 2:47:53 p.m.
http://online.wsj.com/article/SB100...732737716.html?mod=WSJ_hpp_LEADNewsCollection
