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Glitch prompts NYSE to cancel some trades in six firms' shares

The exchange finds 'irregular trading' in 148 stocks, apparently stemming from a technology issue at brokerage Knight Capital Group.

August 01, 2012|By Andrew Tangel, Los Angeles Times
  • Specialist Peter Giacchi looks at prices on the floor of the New York Stock Exchange. Traders saw unusually sharp moves in a number of stocks shortly after the opening bell, a problem later blamed on technical issues at brokerage Knight Capital Group.
Specialist Peter Giacchi looks at prices on the floor of the New York Stock… (Richard Drew, Associated…)

NEW YORK — A trading glitch led to some puzzling stock movements on Wall Street, prompting the New York Stock Exchange to cancel some morning trades in six companies' shares.

The exchange found "irregular trading" in 148 stocks shortly after the opening bell Wednesday — problems apparently stemming from a technology issue at New Jersey brokerage Knight Capital Group.

After conducting a review, the exchange's operator, NYSE Euronext, identified six stocks whose trades "will be busted" if executed at 30% or more above or below their opening prices.

Wednesday's market trouble called to mind automated trading issues that contributed to the "flash crash" of 2010, when $1 trillion briefly vanished from the stock market.

On Wednesday, the trading problems caused the Standard & Poor's 500 index to lose more than 4 points, but the index quickly regained its ground, Bloomberg News reported.

The Securities and Exchange Commission said it was looking into the matter but did not elaborate beyond a prepared statement.

"As is our practice, we are closely monitoring the situation and in continuous contact with the NYSE and other market participants," an SEC spokesman said via email. The SEC did not say more at the trading day's close.

Knight Capital Group, a major Wall Street brokerage firm, said it had identified problems with routing trades in about 150 stocks.

Knight said in a statement that it suggested its market-making clients reroute orders. Knight's over-the-counter securities "and trading in its other businesses are not affected," the brokerage said. "The company continues to review internally."

The NYSE, for its part, said its platform and safeguards to halt trading in stocks that make sharp swings did not experience problems.

"At this time, we believe NYSE systems and circuit breakers operated normally during this period, and we are working with all market participants on the issue," the exchange said in a statement.

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