How Friday's Flash Crash In Plantronics Happened Despite Useless Circuit Breakers
Core Molding, Nucor Steel, and now Plantronics. Individual flash crashes have become such a daily occurrence that they are expected, in fact hoped for, if merely to confirm that nobody but a bunch of deranged robots is left trading stocks. While you won't hear about it on CNBC, as it may go just a little against the station's puff piece on how HFT is not, like, really all that bad, on Friday, just after 2 pm, the stock price of Plantronics (PLT) plunged from $31 to $24 in the span of milliseconds. And most amusingly, not a single circuit breaker was triggered in the plunge! The reason - the SEC's panacea to SkyNet, which incidentally is never proactive and always reactive, the contraption known as circuit breakers, is only applicable to Russell 1000 stocks. PLT, however, with a 'modest' market cap of $1.5 billion belongs only in the Russell 2000 index, which doesn't have any single-stock circuit breakers tied to it. The result: a whole lot of trades that should have cost the rampant algo millions in losses. But never fear: the Nasdaq steps in and makes life for its clients all peachy (while spitting in the faces of everyone else), DKing all the "clearly erroneous" trades, once again confirming that any price discovery that occurs not in compliance with what the exchanges believe is a fair and honest price have no chance in hell of standing. After all, the ponzi monster must be fed with ever increasing stock "prices" even if such prices are merely in the eye of the beholder, the exchange, and the several robots that do all the trading which #Ref out the second there is a pronounced downtick.
More from Dow Jones:
Trades made in shares of Plantronics (PLT) shortly after 2 p.m. on Friday were broken after several stock exchange operators deemed them erroneous.
Exactly one minute of trading in the audio communications company was deemed "clearly erroneous," a Nasdaq OMX Group (NDAQ) spokesman said. Trades executed between 2:06:00 p.m. and 2:07:00 p.m. at or below the price of 29.71 will be broken, according to a statement from Direct Edge.
At 2:06:42, the New York Stock Exchange received a large order to sell shares of Plantronics , sending its stock price to 30.59, from 31.28, according to a NYSE statement. That movement triggered the exchange's liquidity replenishment point system, which slows NYSE-listed stocks at times of heavy market volatility. Meanwhile, on other exchanges, the share price fell to as low as 24.44, according to NYSE. Nasdaq officials declined to comment further. Plantronics wasn't available for comment.
Plantronics ' drop of nearly 28% would have triggered a circuit-breaker if the stock belonged within the Russell 1000 index. With a market capitalization of under $1.5 billion as of Thursday, Plantronics is within the Russell 2000 index of small-capitalization stocks, which currently doesn't have any single-stock circuit breakers tied to it.
Yet another visual presentation of broken markets: