2013 April Flash Cash Explained

G-Log · Jul 14, 2013

Yeah, yeah I know they're selling something but this detailed explanation of flash crash puts everything in perspective.

http://pro.moneymappress.com/EDIGOLD1199MMP/EEDIP713/

Pirocco · Aug 5, 2013

http://blogs.marketwatch.com/capito...crash-response-rules-enter-next-phase-monday/

'Flash-crash' response rules enter next phase Monday
August 2, 2013, 2:18 PM

New rules seeking to prevent another "flash crash" like the one that rattled the markets in May 2010 enter their second phase Monday.

Getty Images
New York Stock Exchange on July 22, 2013

Regulators and exchanges are on high alert, with more glitches expected, even as the new rules should help limit some wild trading at the market open.

"Every time something new is implemented, some things go crazy," said Eric Hunsader, director at Nanex, a provider of real-time data to traders.

In April regulators launched the first phase of new so-called "limit up/limit down" circuit breaker-type rules, which require trades of a group of liquid listed stocks be executed within a range tied to recent prices for that security between 9:45 a.m. and 3:30 p.m. On Monday, those restrictions will be expanded to a larger group of securities and to the start of the market open at 9:30 a.m. and until 3:45 p.m.

Later, all exchange-traded stocks will be subject to the rules, which set up a five-minute pause if trading is unable to occur within the price band for more than 15 seconds.

Expanding the trading restriction to the first 15 minutes of the trading day is expected to help investors as they deal with one of the most volatile periods of the trading day.

Hunsader notes that in the first fifteen minutes of the trading day there are often wild swings in share prices in some stocks, noting that Kemper Corp.'s /quotes/zigman/6401393 /quotes/nls/kmpr KMPR stock price shot up from $39 a share to $357 a share in less than a second at 9:37 a.m. Friday, before dropping back down to around $39 a share again.

"The first 15 minutes is when we see the most egregious moves," he said. "This Kemper case would have been caught by the rules if the security was subject to the restriction. It will protect the public who have day jobs and want to buy the stock and put in an order that converts to a market order at the open. They won't get eaten alive this way."

However, Hunsader also noted that some irregularities still have to be worked out. He pointed out that the price of cell phone company Sprint Corp. stock price on July 11 /quotes/zigman/18855261 /quotes/nls/s S was locked between 9:45 a.m. and 10:11 a.m. because of an anomaly the upper limit price in the permitted band was the same price as the lower limit.

He noted that a similar anomaly took place at Spirit Realty Capital Inc. /quotes/zigman/19621588 /quotes/nls/src SRC on July 19.

The exchanges originally sought to fully implement the measures by October, but last month they decided to delay until Dec. 8 the expansion of the restriction through 4 p.m. The additional time gives exchanges more time to test the procedures to establish closing prices.

Hunsader notes that regulators are worried about the last 15 minutes of the trading day, partly because many traders don't want to end the trading day with a position in a particular security. He also worried that high-speed traders will be able to game the band and take advantage of retail and institutional investors, particularly in the closing minutes.

"Heavy trading at the end of the day could lead to many frozen stock prices with investors unable to finish unloading their positions," he said.
Click to expand...

The bold applies to april.
The underlined to today.

trew · Aug 5, 2013

They should just shut down high frequency trading and be done with it.

All that is necessary is a rule that once an order enters the market it cannot be altered or cancelled for 60 seconds.

worldbubble · Aug 5, 2013

........

Pirocco · Aug 5, 2013

trew said:

They should just shut down high frequency trading and be done with it.

All that is necessary is a rule that once an order enters the market it cannot be altered or cancelled for 60 seconds.
Click to expand...

Mass order given.
3 seconds.
Mass reverse order given.

Mass order given.
60 seconds.
Mass reverse order given.

Better?
Worser?
No idea?

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2013 April Flash Cash Explained

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