As reported by WSJ, yesterday’s trading irregularities, or error, or snafu, or whatever cutesy term this one ends up getting tagged with, is not the first mistake of its kind in the computerized, high-frequency world of the stock market.
The 2010 flash crash is the most notorious example, but it isn’t the only one, and indeed, these kinds of errors seem like they may just become an irritating but regular fact of life for traders and investors.
Here are some of the most notorious examples of computer-driven snafus. Welcome to the new stock market. Mind the gaps.
The Flash Crash obviously the most notorious example of computerized trading run amuk. On the afternoon of May 7, 2010, stocks started dropping, fast. The DJIA fell nearly 1,000 points in a matter of minutes. It recovered most of the losses, but still closed down 342 points. Rather than being the result of a specific error or system breakdown, the crash seemed to just be an extreme example of how high-frequency trading can affect the market. The definitive explanation for what happened that day hasn’t yet come.
BATS IPO BATS had built an all-electronic exchange that over several years became the market’s third-biggest exchange. When the company decided to go public, it proudly decided to list the IPO on its own exchange. But the move was a disaster. The company encountered myriad problems with its platform, with bids on BATS shares plunging to pennies within seconds of its first trades. The break-downs hit other stocks as well, most prominently Apple. BATS withdrew the IPO, and as of today remains a private company.