Market Currents

The NYSE will cancel certain trades in the following stocks following the snafu with Knight...

Wednesday, August 1, 2012, 3:16 PM ET
The NYSE will cancel certain trades in the following stocks following the snafu with Knight Capital (KCG -27.5%) this morning, reports Bloomberg: WZE, CO, EJ, ARC, and KWK.

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This news story has 25 comments:

montanamark Comments (1359)

hope this is it

1 Aug 2012, 03:22 PM Reply Like

Whitehawk Comments (2799)

Why not cancel trades in all cases experiencing unusually high volume and glitches linked to the "event." This situation is unacceptable and the industry needs to fix this, not regulators. Otherwise, the overall market volume and customer interest will continue to decline.

1 Aug 2012, 03:30 PM Reply Like

neobliviscar Comments (127)

That would be more than 160 stocks, many of which traded in a relatively ordered fashion over nearly 30 minutes of trade. Many were within tolerance & started near the previous close.

Many of the trades potentially busted have since been traded against. It would hurt many other traders and counterparties when Knight was the one that left the safety off the gun and let it spray for near 1/2 an hour. Thats why the algo bots usually have a big red punch button on them to stop them if things go wrong, or they can throw the power breakers and pull the back-ups.

Yet Knight is very well connected. Practically a Made-Man on the Street, so expect palm greasing decisions overnight and a lot more broken trades tomorrow.... though technically more than the alloted amount of time has passed ~ unless there is a significant Flash Crash rule change of which I am unaware.

Unless more than a certain % away from the previous days market (*at least* 10%), the trades shouldn't be broken.

Ne'O

1 Aug 2012, 04:32 PM Reply Like

youngman442002 Comments (4980)

The Knight company should lose their license to steal...I mean trade forever...their computers should be seized and put out in front of Wall Street and charge people $50 a whack with a sledge...and the the money given to a charity...oh and they should have to pay for every trade cancelled...and a $10 per order fine....that would stop this in 30 seconds...period

1 Aug 2012, 04:19 PM Reply Like

writser Comments (6)

Investors estimate that Knight Capital lost several HUNDRED MILLION DOLLAR today. As a result, the counterparties of Knight Capital MADE a shitload of money today. Who? Retail investors, for example. Or sharp market participants like you, with 4000 posts on SeekingAlpha.

Yet you want them to lose their license? I do not understand your reasoning.

1 Aug 2012, 04:45 PM Reply Like

Sammy Lee Comments (227)

What retail investors? I thought those were extinct already.

1 Aug 2012, 10:17 PM Reply Like

NN Securities Comments (161)

Retail investors had "stops" which were blown out.

2 Aug 2012, 01:03 AM Reply Like

moneyTalksBSWalks Comments (169)

I think most folks know or at least suspect that the market is a gigantic rigged game anyway. Knight was stupid to get caught, the smarter ones are picking our pockets every day.

1 Aug 2012, 05:35 PM Reply Like

Christopher F. Davis Comments (763)

And sadly, KCG will be a good buy now as the share price will rebound in the next week or so. Mark my words, analysts will be out in droves tomorrow telling us to buy, and the p.o.s will rebound.

1 Aug 2012, 07:59 PM Reply Like

Sammy Lee Comments (227)

http://bit.ly/Ndy2Il

A good buy indeed.

2 Aug 2012, 07:22 PM Reply Like

Eighthman Comments (207)

Rigged. Corrupt. Manipulated. Palm Greasing. Well-connected.

When will we ever stop using words like these to describe what's happened to the markets?

1 Aug 2012, 08:31 PM Reply Like

Garthilk Comments (406)

As soon as glass door investing comes into reality. At any minute, we should know exactly who is trading what.

1 Aug 2012, 10:08 PM Reply Like

Clayton Rulli Comments (1504)

What you mean cancel trades? That is garbage!!!! How do I get a do-over?

1 Aug 2012, 10:42 PM Reply Like

redcars Comments (8)

What happens to the people that got their stops taken out with the flood of sell orders coming from Knight? There are a lot of third party losses here. Wait until people wake up to see their confirms.

2 Aug 2012, 12:49 AM Reply Like

Fr33f0rm Comments (291)

I'm trying to understand this story but something is not clicking...so...Knight set up a bad algorithm...and they get to cancel their losses because the algorithm was bad...am I interpreting this right or is there something I'm missing?

Isn't that kind of like a car speeding in a school zone, hitting a kid and then saying "sorry, I meant to be driving on a different road, could you fix the kid for me?"

2 Aug 2012, 02:38 AM Reply Like

NN Securities Comments (161)

The entire resolution process is broken. If a small investor did the same thing, he would be stuck with the entire bill. Simple as that.

Knight deserves all the losses they should have incurred as a result of this.

2 Aug 2012, 07:30 AM Reply Like

neobliviscar Comments (127)

Agree.

2 Aug 2012, 09:16 AM Reply Like

neobliviscar Comments (127)

I don't know about all of them, but I do think the vast majority of them should stand. Market Operations Team is in place to break erroneous trades *far away* from the market and clearly erroneous. Many of these were directly into the middle of bid/asks, and should stand.

2 Aug 2012, 09:19 AM Reply Like

NN Securities Comments (161)

One problem with breaking trades is finding the acceptable threshold and handling the implications.

For example, lets say you bought MCP at 14.50 and sold at 16.40 when it whipped back. If they break the first trade, what happens to the second trade? I wouldn't have sold MCP if I didn't get the buy order in the first place. How is that fair to me?

2 Aug 2012, 09:25 AM Reply Like

neobliviscar Comments (127)

What you say about MCP is what I basically did in BRK.B yesterday.
I've filed break requests over the years and had trades broken for me and against me, especially before we went to decimals from fractions ($33 1/8 when you meant to type $31 3/8, market was not moving and stock had a 1/4 spread)

Normally a Break just shouldn't happen unless a gross error above or below the market by at least a 5% percentage if a non moving stock. There were guideline rules, and I hope Knight doesn't get to bend the rules too much.

2 Aug 2012, 09:35 AM Reply Like