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House Calls For Hearing On Stock Market "Glitch"

Posted by timothy on from the hands-on-the-tables-gentlemen dept.

Lucas123 writes "The House Financial Services securities subcommittee plans to hold a hearing next Tuesday to examine what caused the US stock market to plunge almost 1,000 points in a half hour Thursday, and it called on the SEC to investigate possible problems with computer algorithms that may have exacerbated a human order-entry error and led to the precipitous drop. 'Reports have surfaced that much of this movement was potentially as a result of a computer glitch,' Committee Chairman Kanjorski said. 'We cannot allow a technological error to spook the markets and cause panic. This is unacceptable. In this day and age and with the use of such complex technology, we should be able to make sure that our financial markets are effectively monitored and investors are protected.'"

8 of 180 comments (clear)

  1. What glitch? by AHuxley · · Score: 3, Interesting

    The world got to see the reality for a short time and then went back to sleep
    http://www.zerohedge.com/article/day-market-almost-died-courtesy-high-frequency-trading
    http://www.bloomberg.com/apps/news?pid=conewsstory&tkr=C%3AUS&sid=agW5_B0D1z9M
    "CME Group Statement on Today's Market Activity:"
    "does not appear to be irregular or unusual in light of market activity today"

    --
    Domestic spying is now "Benign Information Gathering"
    1. Re:What glitch? by AnonymousClown · · Score: 5, Interesting
      From top liink:

      After today investors will have little if any faith left in the US stocks, assuming they had any to begin with.

      During the GM bankruptcy, I saw their common stock was still being traded on the pink sheets. That's when I realized that many traders have shit for brains.

      When a company goes bankrupt, their equity gets wiped out. In other words, the traders were trading worthless pieces of paper. My father in law almost bought some thinking it was a great deal. I clued him into the idiocy.

      --
      RIP America

      July 4, 1776 - September 11, 2001

    2. Re:What glitch? by ph1ll · · Score: 4, Interesting

      Agreed. A friend of mine who is a lawyer for a well-known investment management firm was amazed when their traders were doing business with Lehman the day after it filed for bankruptcy.

      When he asked them what the hell they were doing trading with a bankrupt, they told him "but the prices on the screen are amazing!"

      He had to explain to them that the prices were amazing because they were unlikely to see the transaction completed by their counterparty. "Have you not been reading the papers?" he asked, exasperated. But all they could do was stare at the trading screen.

      They just didn't get it. That's the thing about these so-called Masters of the Universe - they're not the best and the brightest despite what they think.

      My friend then had to spend the next 36 hours working non-stop to close the positions his traders had taken as best he could. The really astonishing thing was that his boss reprimanded him for not explicitly telling the traders earlier not to trade with Lehman.

      --
      --- "We've always been at war with Eastasia."
  2. Re:Well... by hemlock00 · · Score: 3, Interesting

    Are you suggesting we shouldn't have a hearing for it? Not really sure the benefit of *not* having a hearing would be. At the most, it draws more attention to the fragile system, and there would be a possibility of something being done about it. At the least, it would officially destroy the idiotic excuse that "someone hit b instead of m" story that some media has been circulating.

  3. Who made the money? by hairytomato · · Score: 5, Interesting

    Follow the money. SOMEONE made money, it sure as hell wasn't me.....

  4. Re:Big Bank Conspiracy by causality · · Score: 3, Interesting

    Is it mere coincidence that the Senate planned for a vote to break up the big banks on the same day?

    "In politics, nothing happens by accident. If it happened, you can bet it was planned that way."
    -- Franklin D. Roosevelt

    --
    It is a miracle that curiosity survives formal education. - Einstein
  5. To whoever can help me understand this by ericlondaits · · Score: 3, Interesting

    Perhaps someone who knows more about stock trading can help me understand:

    1) TFA states that someone made an input mistake and sold 16 billon Fortune 500 stocks instead of 16 millon. Did he have that many to sell? How big a player do you have to be to be able to make these type of mistakes.

    2) TFA states that at one point shares for some companies dropped to a mere penny and then rebounded. Were people able to take advantage of the sudden drop to sweep and get a fast couple of millons due to the glitch?

    And in conclusion: Does the system's inherent frailty allow this type of event to be orchestrated in order to make a big profit, or a new type of terror attack?

    --
    As a Slashdot discussion grows longer, the probability of an analogy involving cars approaches one.
    1. Re:To whoever can help me understand this by russotto · · Score: 3, Interesting

      1) TFA states that someone made an input mistake and sold 16 billon Fortune 500 stocks instead of 16 millon. Did he have that many to sell? How big a player do you have to be to be able to make these type of mistakes.

      This sounds like the sort of apocryphal story someone made up meaning it sarcastically. ("WTF happened? Probably some moron hit 16 billion instead of 16 million!"). If there was a 16 billion dollar sell order, there's a record of it and it wouldn't still be speculation now.

      2) TFA states that at one point shares for some companies dropped to a mere penny and then rebounded. Were people able to take advantage of the sudden drop to sweep and get a fast couple of millons due to the glitch?

      Some of the exchanges reversed those transactions on some of the stocks, but not all of them. Some people with existing limit orders probably did pretty darned good.