Computer Glitch Causes Havoc and Losses on Nasdaq

goombah99 writes "In an illustration of how fragile the electronic stock market system is the NY Times is reporting how a tiny computer glitch rippled through the Stock Markets with buyers who bought low and sold high taking huge losses. An erroneous large sell order was entered. Many people bought at this low price, then signed options contracts to sell these at higher prices, locking in a profit. Or so they thought utill the erroneous low sell order was removed. Now to honor their options they had to buy the stock at a higher price. Since exchanges trust each other's trade prices it rippled throughout the system. There does not seem to be any way to gracefully undo such errors."

Comments

Anybody know what platform Nasdaq uses?

[jaunx]

I'm betting it is related to the biggest monopoly -- I mean company on their index. What is to stop Microsoft from ditching the Nasdaq stock market for the NYSE if Nasdaq weren't to use M$ software?

I wonder if the bug was related to the Microsoft platform or developers for the Microsoft platform.

much ado about nothing

[iggymanz]

bah, a miniscule amount of money involved in a minor glitch in a 3rd party system putting in an erroneous price that the NASDAQ successfully detected & stopped.....this has nothing to do with how "fragile" the stock market systems are. Move along, nothing to see here.

Re:Trading has its risks

[Prof.Phreak]

Nowhere in that equation is there EVER risk of a glitch in the computing system factored in.

And how would that be different from say... investing in Microsoft, and having their stock do a nose dive because of some internet worm?

(or worse, investing in something like toilet paper and having the company go belly up (or loose lots of profits) because their computer system screwed something up?)

What if after an investigation they determine that the glitch was caused by lightning hitting something just in the right place in the right time, and flipped a few bits in just the right way. Who do you blame then?

Besides, people who lost money on this are not value investors - day traders are gamblers - a value investor wouldn't invest in something that `just came up'.