From $44 To $4 In Less A Second: Today's Flash Crash Brought To You Courtesy Of The Nasdaq And A Clueless And Corrupt SEC

Tyler Durden's picture

Today's reverse engineered HFT algo strategy: if price drops more than x% in a millisecond, then enter order y% below bid, else pull all bids, especially when price is 90% below most recent NBBO posted a mere second earlier. Which is precisely what happened to Progress Energy (PGN), which dropped from $44 to $4 in less than second, but not in quantized fashion (i.e. fat finger), but in a gradual, than exponentially accelerating manner, as an algo took out all the bids. We can't wait for this week's 21st sequential outflow from equity funds: luckily investors are now all too aware that holding a stock, any stock, is dangerous to one's sanity, not to mention stop loss orders. And where the hell was the circuit breaker on this one? The market is and continues to be a miserable joke, especially courtesy of Nasdaq and the 160 trades in PGN that occurred at ridiculous, HFT-exaggerated prices. And of course, all those lucky fools who bought the stock at a 90% discount are about to be DKed, because it is Nasdaq's prerogative to protect its HFT paying clients, and not investors.

And here is the stepwise drop from $44 to $4, with no circuit breakers being activated. Total and absolute farce. In China someone would have taken a bullet for this. Only in America do the regumalators demand greater budgets, and year end bonuses, to continue their worthless shitjobs.

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HedgeFun's picture

A shout out to whatever computer bottom ticked that trade

MarketTruth's picture

"All your stocks are belong to us. We drop the bomb. HA HA HA!" -- HFT Computer's picture

tyler '  S ,  i listened and listened and listened to the 3 part interview with MAX KEISER. at the very end after describing and discussing HFT and MAX's gas tank ripoff analogy. one of you said you would come back another time and talk with MAX. did you and if so does someone have that video link. it was really really interesting to hear one of you talk. well i liked your voice, strong with conviction, and that was a year ago.

kato's picture

so glad the SEC et all are on teh case

cat2's picture

You gotta admit this is funny stuff.  Who can trust this market?  And the rollbacks are totally bogus and for the benefit of the bankers/wall street.  A game so rigged it's just funny.

EscapeKey's picture

A part of me thinks it's funny. A part of me thinks it's tragic. And a part of me gets really angry about this.

The markets USED to be a place, where you could count on, say, AMD being downgraded would lead to a 5% drop in stock value. These days, it will drop by 2%, before all HFT algorithms jump on this great Intel-AMD arbitrage opportunity, and bring them back into equilibrium, followed by the arbitrage opportunity between Intel-Microsoft, etc, and within a second the entire maket has adjusted.

But the computers are here to stay.

Miramanee's picture

This is the logical extension of a system that must "grow" lest all he'll breaks loose. Growth becomes a charade, a farce, a crime, a fraud...and the PTB pull out every stop in the propaganda wars to keep growth alive!! That is why, eventually, we will see the outbreak of real, guns and bombs war vis this stuff. better to destroy another persons country than allow your own to be eaten alive by civil strife. We are a cosmic joke, we humans.

Rick64's picture

 It almost seems like they are honing their skills from causing flash crashes to a gradual slide where it would be unrecognizeable.

Cognitive Dissonance's picture

It looks like something you see on the Cartoon Network or in a Three Stooges episode. Someone steps into a very deep hole, quickly pulls himself out, brushes off some dirt and grass and then continues walking as if nothing happened at all.

Whoopsie daisy. Move along, nothing to see here.

nopat's picture

I was going to say Wile E. Coyote, but to each his own.

Cognitive Dissonance's picture

Poor Wile E has been taking so much shit from the Road Runner all these years that I didn't have the heart to pile on. :>)

EscapeKey's picture

I always thought Road Runner was bit of a prick.

Almost Solvent's picture

And so is Time Warner. Home of unreliable Road Runner internet access and glitchy cable boxes that seem to freeze frames and reset automatically while I'm trying to surf the web or watch something on TeeVee.



DaddyWarbucks's picture

Let's get our scripts right people. All you retail investors will be wearing the flammable coyote costumes and all you insiders will be wearing the nomex road runner costumes. Ready everyone? Take 312, lights, cameras, action!

Here's a thought. I read the phrase price discovery, what if the "real" price is at the bottom of that chasm?


DaddyWarbucks's picture

Sorry, my fingers have been a little fat since they got caught in the HFT vice.

doggis's picture

you also get 'fat' fingers from drinking too much booze....... can we do a liver scan on you daddy??

william.smith61's picture

Air Mass Meter The fact that they don't tells you their economy (and by extension their control structure) is hanging on by a bees dick as well

Turd Ferguson's picture

I just think its bullshit that the NYSE steps in and DKs these trades. 

Make the trades stick and maybe this shit will stop happening so frequently.

MsCreant's picture

It's just another variation on rewarding failure.

cat2's picture

Privatize earnings, socialize (to the retail traders) losses/failure.

It's the new american crony capitalism way.

IMO, they should be sued.

MarketTruth's picture

Agreed they should be sued, and starting with the Federal Reserve is as good a place as any. Of course people who sue the wrong people get a sudden case of a heart attack, their plane crashes, they commit suicide drowning while locked inside a duffle bag...

Or you hang yourself, like the DC Madam who had plenty of hooker/escort evidence against various high ranking officials in Washington.

lizzy36's picture

It is the only solution.

Further is has the additional effect of telling market players that the SEC cannot (and does not) protect investors and/or maintain market integrity.

Alas, one cannot justify a $1B taxpayer funded budget AND a caveat emptor stance. 

Almost Solvent's picture

Nice to look at

Lovely to hold

But if you break it

Consider it sold


They broke the market, now they own the market, they just used taxpayer funds to complete the purchase.

wintermute's picture


This is another facet of moral hazard. Just as TBTF bankrupt banks get their failure rewarded with bailouts - the HFT owners get failure rewarded with DK'd trades.

The buyer at $4 MUST be punished for their computerized stupidity - or FLASH CRASHES WILL KEEP HAPPENING.

SEC - why do you pretend this can just continue?

MsCreant's picture

I like those two fangs up before the gradual cliff slope. Malfunction junction.

hedgeless_horseman's picture

Those were Leo's and Harry's market-long orders.

MilleniumJane's picture

Yeah, like yo-yo tricks...Shoot the Moon!   Shoot the Moon!   Walk the dog...

TraderTimm's picture

Those were probably "oh shit, someone might hit us" bid-swerves before the HFT cruise missile did a through-the-bunker-window market hit.

This isn't a market, its pong crossed with an etch-a-sketch.

samseau's picture

so how do all the bulls and anti-collapse people rationalize shit like this?

Cincitucky's picture

HFT programmers obviously forgot to wrap the algorithms with the try{} catch (Exception ex){MessageBox.Show("Computation Failure");}

SoCalBusted's picture

These events make me wonder if GC kicked in during a critical section of the code.

The Rogue Trader's picture

Agree Turd....Make the trades stick....

bigdumbnugly's picture

of course if this was your clothes dryer overloading the breaker like this you'd have real issues. 

but here your buy just gets Servpro'd... like it never happened.

MsCreant's picture

Did flash crashes happen before HFT?

Hondo's picture

What would you expect from a corrupted market run by corrupted regulators working for corrupted investors.  I'm out, will be out and I really don't care where the markets goes from here...hell preferably

AccreditedEYE's picture

Broken market? What broken market? LOL! Investors keep ignoring these tremors at their own risk....

hugolp's picture

I know this is going to sound naive, but why does the Nasdaq protect the HFT and does not force them to suffer the loses they should?


Its probably because it gest more money, but its going to kill it long term.

cat2's picture

I think you are right, I think HFT actually makes the exchange money (in transaction fees).  When HFT frontrun loops a single retail trade into 10 trades, I think the exchange makes more money, but not sure.  They wouldn't allow it if it didn't make them money too.  But it's the same ole' baby boomer short sightedness, they forget that if you outsource everything, screw the customer too much your long term biz will die.  But who cares, "I got MINE".  (baby boomer motto)

lizzy36's picture


They will cannibalize one another. In the absence of any actual structural reform (seriously lol) it is the best outcome.

The USA is plagued by short term election cycle thinking. It will eventually cannibalize the country.

nopat's picture

The election cycle has little to do with it (IMO, at least).  It's the pervasive (perverse?) nature of politics in today's society and the supreme guiding torch of "fairness" as a religion that a majority of the population subscribes to.  Information tech has given a lot of people with little idea how the world actually works a conduit to organize and enact change.  There's a reason the founding fathers limited governing responsibilities to the [largely] independantly wealthy.  If I'm guilty of historical revisionism...fuck it, then the founding fathers should have.

Case in point - I go to my HOA meeting, purely informational, they're re-paving our streets and want to let us know the schedule and that, if in the event we decide to get brazen and remove the barricades to our streets, not only will we be fined $500, but we will also have to pay out-of-pocket the expense to repave that section.  Straight forward?  The shitshow of American politics on a micro scale started in with the "did you not feel it important to include us in the decision-making process" briggade, followed closely with a scruitiny of the sealed-bid, and then finished off Peter North style straight to the face with a complete lack of understanding that repaving costs $200k, re-sealing will accomplish a similar task for only $22k, will be paid-in-full this year and allow the Treasury to grow $55k for other miscellaneous expenses (like the woefully-inadequate gate system) all without causing HOA dues to increase.

The internet needs to go back to being the pure bastion of porn of my formative years it once was; if there's one thing that's going to destroy us, it's our complete inability to grasp that some people shouldn't have a voice.  At all.

Vergeltung's picture

how very democratic of you!

lizzy36's picture

"the greatest argument against democracy:5 minutes with the average voter."

StychoKiller's picture

"Do not blame Caesar, blame the people of Rome who have so enthusiastically
acclaimed and adored him and rejoiced in their loss of freedom and danced in
his path and gave him triumphal processions. ... Blame the people who hail
him when he speaks in the Forum of the 'new, wonderful good society' which
shall now be Rome's, interpreted to mean 'more money, more ease, more security, more living fatly at the expense of the industrious.'" -
Roman statesman Marcus Tullius Cicero (106-43 B.C.)

RobotTrader's picture

Looks like the world record bid to cover on the 2 years today is spawning yet another "Animal Spirits" dash for trash run today.