NYSE To Cancel Trades Beyond 30% Band From Opening Price In Various Stocks, Knight To Foot Bill For Balance?



Update: NYSE has completed its review of the impaired stocks. Those are the only 6 stocks which will see trade cancellations:

15:54 ET 01 Aug 2012

 

MARKET: NYSE, NYSE Amex CATEGORY: Market Operations Update
The NYSE and NYSE MKT in association with all relevant regulatory authorities have concluded the review of this morning’s CEE filing.  The six symbols listed below will be the only symbols with cancelled trades; no additional symbols will be considered for review.

 

This decision is not subject to appeal.

 

Symbols:

 

WZE at or above $ 4.68
CO at or above $ 3.22
UTG RT at or below $ 0.0497
EJ at or below $ 3.36
ARC at or above $ 5.71
KWK at or above $ 5.91

Just as the only response by the SEC and various exchanges to the May 2010 flash crash was to cancel all trades beyond a 20% band of the prevailing NBBO before the Flash Crash (in the process destroying any confidence that market crash perpetrators would be truly punished by forcing them to incur the full damage resulting from the consequences of their stupidity), so the NYSE has determined to unilaterally cancel all trades, initially in six stocks, but probably in all of the attached 140 symbols, in a move that will teach the offenders absolutely nothing, and will punish only those who took advantage of a broken market to incur one-time profits courtesy of a broken market structure. However, what it will also do, is likely make Knight directly liable for any losses incurred by traders from the opening price through the 30% breakage threshold. In other words, with Knight losing about $ 300 million in market cap today, investors are speculating that the net loss to the firm will be just that as it has to foot the bill. Considering the volume and breadth of the impaired universe, this will likely be very big underestimation of just what the final bill will be to Knight.  And isn’t it ironic that Knight itself was until recently complaining about how much money it itself lost on the FaceBook IPO as a market maker…

From the NYSE:

CEE Review Determination for multiple symbols

 

14:57 ET 01 Aug 2012

 

The NYSE and NYSE MKT have determined to cancel all trades in the following six symbols associated with this morning’s CEE for multiple securities. Trades executed 30% or more above or below the NYSE/NYSE MKT opening price today between 09:30:00 a.m. and 10:15:00 a.m. ET will be busted.

 

This situation is still under review by all relevant regulatory authorities.

 

Symbols:

 

WZE at or above $ 4.68
CO at or above $ 3.22
UTG RT at or below $ 0.0497
EJ at or below $ 3.36
ARC at or above $ 5.71
KWK at or above $ 5.91

And then the NYSE gave out this update as well:

Update: CEE Review Determination for multiple symbols

 

15:11 ET 01 Aug 2012

 

MARKET: NYSE, NYSE Amex CATEGORY: Market Operations Update
The NYSE and NYSE MKT encourage all member firms to keep their Common Customer Gateway (CCG) lines up and available after 4 p.m. ET today as some of the trade cancellations referenced in the prior message may not flow back until after 4 p.m. ET.

 

In addition, all associated tape prints will be removed from the Consolidated Tape after 4 p.m. ET


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