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From $28.80 To $2,600 In Two Seconds: Thank You SkyNet

Tyler Durden's picture




 

Now that the NYSE no longer has to concern itself with various overeager acquirers procuring highly confident letters from the likes of Jefferies that it can procure 10x Debt/EBITDA B2/B- HY bonds to purchase every single public exchange in the world, it can focus on doing what it does best: busting flash smash trades, and taking away the profits of those who are lucky enough to spot an algo gone apeshit and trade against it. Earlier this morning the stock of Strategic Hotels and Resorts 8.25% Cumulative Preferred Shares (BEE.PR.C) traded from $29 to $2,600 in just about a second. Thank you NYSE, SEC and fair and efficient markets. Or, according to Mary Schapiro, Waddell & Reed. Naturally none of this is any consolation to those who may have prudently been hoping that some idiot robot will take the stock into the stratosphere and had a $2,600 sell limit: all trades (all 15,900 of them) above $29.74 were cancelled. Thank you fair and efficient SkyNet.

(Charts courtesy of Nanex)

And for a complete list of the actual cancelled prints, check out Nanex' website.

 

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Wed, 05/18/2011 - 11:04 | 1287095 Hondo
Hondo's picture

WTF......what if I have an algo that sells/shorts anything up 100%??????  The exchange is criminal....

Wed, 05/18/2011 - 11:06 | 1287103 Ray1968
Ray1968's picture

Exactly. They permit scalping pennies on trades, but the second the algos screw up and get exploited, they are protected.

Something is just not right. Any wonder why the average investor is out?

Wed, 05/18/2011 - 11:22 | 1287176 hedgeless_horseman
hedgeless_horseman's picture

The fucking white ball stopped on the black 17. 

I had bet on the black 17. 

Now I don't get paid?

What the hell kind of casino are you all running?

Wed, 05/18/2011 - 11:23 | 1287185 TheTmfreak
TheTmfreak's picture

It is the classic "everyone must win" scenario. Subsidize their failure to make "solid algos." They rely on this shitty idea, and yet never pay the concequences for it. Rigged system I'd say.

Wed, 05/18/2011 - 12:22 | 1287516 Hard1
Hard1's picture

Exactly, they make less than a penny 99.9999999% of the millions of trades, loose hundreds of millions 0.0000001% of the trades, and they get the exchange to cancel their only loosing trades as obvious mistakes.  They must hail Mary (Shaphiro) for her benevolence!!! Rigged system for the rest of us.  If they want to let their algos loose, they must bear the risk!!!! c'mon!!! free the markets!!! fair game!!!!

Wed, 05/18/2011 - 23:31 | 1290245 daytrader
daytrader's picture

1) Get fill and think you are short from the best price ever.

2) Cover and start counting your $

3) Learn trade has been broken (which makes you long)

4) Get smoked on long position

5) Repeat

Wed, 05/18/2011 - 11:18 | 1287163 DeadFred
DeadFred's picture

They could stop the flash trades by adding a few lines of code but they don't. Lazy? I doubt it. That flash trading ability must have a potential benefit for them to keep it in the programs. I wonder what it is.

Wed, 05/18/2011 - 11:43 | 1287277 Commander Cody
Commander Cody's picture

Does anyone verify that all flash trades above the set limit are cancelled, or, only most?

Wed, 05/18/2011 - 12:55 | 1287685 Republi-Ken
Republi-Ken's picture

Anyon who thinks SPECULATORS

are NOT THE BIGGEST CAUSE of high commodity prices

is a (A) Fool or (B) Speculator...

Wny not make certain key commodity CASH ONLY / no margin.

And kill the futures too.

Only Producers sell to End Users who buy at 100% CASH.

OIL, WHEAT, RICE, CORN, SOYBEANS ... critical human survival needs.

There is enough else to make money on in our stupid little world.

Wed, 05/18/2011 - 11:05 | 1287098 Sudden Debt
Sudden Debt's picture

Good to see the government protects the interests of our HFT friends. It's the least the gov. can do, because without them there wouldn't be a bubble in the first place.

Next up: Everybody who makes a profitable trade gets their trade cancelled. If you sell at a mayor loss, business as usual...

 

Wed, 05/18/2011 - 11:16 | 1287162 rocker
rocker's picture

Note: Today Goldcorp's Warrants GG/WS halved in price. Will they trash the trades on those who got stopped out.

                  From 2.66 to 1.31   Like I said, the market is now rigged and a Fool's game.

                  Can you make money, maybe if you have inside information. Or dam lucky. Hope might work too.

                  Or if you are Goldman, JP Morgan or BAC.  They have perfect trading day. Enough said.

                  They decide, and you lose.  Step right up to the biggest fraud in Capital Markets. The U.S.A.

Wed, 05/18/2011 - 11:06 | 1287105 firstdivision
firstdivision's picture

They should let these 10 trades go through.  It is total bs that they stop and reverse the trades.  The algo's are just running as designed, if certain inputs come in and cause the algo to overflate the price to pay, then that is the firms problem.  Not the one that was willing to sell the security at $2500. 

Wed, 05/18/2011 - 11:10 | 1287121 dracos_ghost
dracos_ghost's picture

The algo's are just running as designed

 

Except the problem is that these algos are horribly designed. Absolutely unstable. If an algo responds to slight changes in input like this, it has no reason to be allowed to exist.

 

Wed, 05/18/2011 - 11:20 | 1287170 firstdivision
firstdivision's picture

Then as I stated, that is the firms problem that implimented the algo, not the sellers fault. Therefore, the trade should still stand.

Wed, 05/18/2011 - 11:52 | 1287304 TheTmfreak
TheTmfreak's picture

I'm with you 100% of this.

Make a bad investment and still get the benefits from it? Really?

All it would take is a couple of these flash crash trades to stand and you'd see a completely different tune coming from these dolts.

Wed, 05/18/2011 - 11:06 | 1287106 NERVEAGENTVX
NERVEAGENTVX's picture

Something tells me the sock puppets on CNBS will forget to mention this. As always.

Wed, 05/18/2011 - 11:05 | 1287110 Cognitive Dissonance
Cognitive Dissonance's picture

As the water spins ever closer to the bottom of the toilet bowl, the velocity of the spin accelerates exponentially.

I hear the final plunge is a wild ride. I recommend strong drugs and a partner for when the final kick comes.

Wed, 05/18/2011 - 11:12 | 1287143 Clamdigger
Clamdigger's picture

The big question, of course, is who is going to be the stubborn floater?

Wed, 05/18/2011 - 11:20 | 1287174 SoNH80
SoNH80's picture

I like your style.  The only stock I would invest in are the bluest of blue chips, like Procter & Gamble... but oh wait, that was flash crashed, too.  So much for that idea.

Wed, 05/18/2011 - 11:09 | 1287116 Racer
Racer's picture

If the HFTs lost out big time for a change it might actually make a change

Wed, 05/18/2011 - 11:12 | 1287128 Jack Mehoff
Jack Mehoff's picture

Never a cancelled trade for the Algos designed to implode Silver.

Wed, 05/18/2011 - 11:10 | 1287133 TruthInSunshine
TruthInSunshine's picture

Damnit, I had the June $2700 calls on this.

You Bastards!!!

Wed, 05/18/2011 - 11:13 | 1287150 Franken_Stein
Franken_Stein's picture

 

LOL !

How foresighted of you.

 

Wed, 05/18/2011 - 12:32 | 1287554 Hard1
Hard1's picture

LOL, I had 2,300 calls with May 18th 11:37:03 expiry. Also worthless.  

Wed, 05/18/2011 - 11:11 | 1287139 InconvenientCou...
InconvenientCounterParty's picture

It's about time this ethically bankrupt group of parasites got some play from the judicial branch. It must be right around the corner.

All you zero gov't, zero regulation freaks can STFU and lock yourself in your hobbit hole.

Wed, 05/18/2011 - 13:14 | 1287788 citizen2084
citizen2084's picture

Really? the govt is the cure? Where is your savior state through all this?

As long as govt has authority to redistribute wealth it will be corrupted.  We are getting exactly what govt gives. Influence to the powerful. 

The govt is great at making certain things:

Dead bodies out of living ones 

Criminals out of law abiding citizens.  "Was that milk your selling mr Amish all queda?"

Ciao

Wed, 05/18/2011 - 11:11 | 1287141 tecno242
tecno242's picture

how are they supposed to curb crap like that if they always cancel the trades.  There's no fear of your computer going psycho.

Wed, 05/18/2011 - 11:22 | 1287142 Franken_Stein
Franken_Stein's picture

 

Sarkozy is certainly chuckling and laughing his ass off and rubbing his palms against each other as we speak at the thought of his fiercest rival for the French Presidency being removed in such a embarassing manner.

By the way, Stephen Schwarzman is still in Paris !

I wonder if he is member of the Council on Foreign Relations.
At least we found out that the CFR headquarter is only 3 blocks away from his appartment at 740 Park Avenue, Manhattan, New York.

 

So we have 3 key players in this drama with their HQs in Park Avenue:

 

1. J.P. Morgan Chase, whose John Lipsky is likely to be DSK's successor at the IMF (270 Park Avenue)

 

2. The Council on Foreign Relations (Harold Pratt House, 58 East 68th Street / Park Avenue)

http://www.cfr.org/about/contact.html

 

3. 740 Park Avenue

Home of Stephen Schwarzman and David Koch of Koch Industries, main financier for Americans for Prosperity, an astroturf and perception management organization

http://bp0.blogger.com/_61djkGwfEZo/SIioePzK6tI/AAAAAAAACYg/LGjahepTcCU/...

http://en.wikipedia.org/wiki/740_Park_Avenue

 

Wed, 05/18/2011 - 11:16 | 1287147 johnQpublic
johnQpublic's picture

welcome to Harrah's......enjoy the gaming and delight in our shows and fine restaurants

 

caution...rules may change on all games at any time without prior notification

 

for compulsive gambling problems call 1-800-eat-loss

Wed, 05/18/2011 - 11:20 | 1287180 tawdzilla
tawdzilla's picture

if the mutant algo was in the money, the exchange would have let it be...this is socialized trading...privatize the gains, socialize the losses. 

Wed, 05/18/2011 - 11:25 | 1287190 TruthInSunshine
TruthInSunshine's picture

How dare anyone insult Las Vegas by comparing it to Wall Street.

In Vegas, they'll tell you your pathetic odds, they comp you quite nicely (or used to), and they don't kick you in the balls and sodomize you when you leave.

Wed, 05/18/2011 - 11:26 | 1287191 razorthin
razorthin's picture

microcosm of privatize gains/socialize losses.

Wed, 05/18/2011 - 11:32 | 1287212 Apocalicious
Apocalicious's picture

The game works like this: they can arbitrage you, but you can't arbitrage them. Got it? Nice and fair.

 

All animals are equal. but some animals are more equal than others.

Wed, 05/18/2011 - 11:39 | 1287257 RobotTrader
RobotTrader's picture

These "Flash Spikes" are yet another tool by TPTB to discourage short-selling.

They are doing test runs right now, so far it is working beautifully.

The next time stocks come under pressure, they will unleash this weapon in full fury, creating spikes all over the place to hit everyone's stops.

I would not underestimate the power of Uncle Gorilla at this point.  The confidence level of the Fed has to be increasing exponentially, as it has successfully "whipped" inflation, skied consumer stocks, and kept the bond market functioning smoothly at 40-year low interest rates despite all the screeching and wailing by Congress about the debt ceiling.

Wed, 05/18/2011 - 11:48 | 1287306 strannick
strannick's picture

Bad Robot.

Now if only Goldman Gary Gensler would spank thse COMEX silver HFT bots who trade more silver in a day thats mined in a year. They DEFINATELY arent discouraging (naked) short selling.

Wed, 05/18/2011 - 11:49 | 1287310 strannick
strannick's picture

Bad Robot.

Now if only Goldman Gary Gensler would spank thse COMEX silver HFT bots who trade more silver in a day than is mined in a year. Those badboy Bots DEFINATELY arent discouraging (naked) short selling.

Wed, 05/18/2011 - 11:55 | 1287336 FreakuentFlyer
FreakuentFlyer's picture

i can not really tell the exact venue(s) that matched these (ludicrous) trades - what are they?

Wed, 05/18/2011 - 11:59 | 1287342 strannick
strannick's picture

Bad Robot.

Now if only Goldman Gary Gensler would spank thse COMEX silver HFT bots who trade more silver in a day than is mined in a year. Those Comex silver Bots DEFINATELY arent discouraging (naked) short selling.

Wed, 05/18/2011 - 11:55 | 1287355 FreakuentFlyer
FreakuentFlyer's picture

i can not really tell the exact venue(s) that matched these (ludicrous) trades - what are they?

Wed, 05/18/2011 - 12:12 | 1287436 cougar_w
cougar_w's picture

The 15,900 winners were also robots.

Nobody with an actual pulse gets to play this game.

Wed, 05/18/2011 - 12:28 | 1287550 Mach1513
Mach1513's picture

Liquidity????????????

Wed, 05/18/2011 - 14:09 | 1288043 ZeroPower
ZeroPower's picture

Uber!

Wed, 05/18/2011 - 12:39 | 1287584 KickIce
KickIce's picture

Did someone, other than Wall Street, make a hefty profit?

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