We Have Confirmation: This Morning's Market #Fail Brought To You By Goldman Sachs
This morning's debacle in the options pit appears - just as we noted - to be due to Goldman Sachs 'erroneous' trades:
- *GOLDMAN MAY LOSE AS MUCH AS $100M ON ERRONEOUS TRADES: FT
But, as we also noted earlier, unlike Knight (which was wiped out when its market-making algos went rogue), in Goldman's case:
- *GOLDMAN SAYS 'WORKING WITH EXCHANGES' TO RESOLVE OPTIONS ISSUE
They get everything DK'ed...
People familiar with the matter identified Goldman as the trading firm behind the options trades that led exchanges run by NYSE Euronext, CBOE and Nasdaq OMX to say they were reviewing the transactions.
Goldman’s losses from the trades could amount to $100m if there were not cancelled.
The development came after a large number of trades outside the normal price range flooded US options markets in the opening minutes of trading, stemming from NYSE Euronext and spilling out to rival exchanges.
The problems highlight the systemic challenges for the highly fragmented and interconnected US stock market, where securities swap hands at millisecond speeds across a dozen venues. They also come just months after the CBOE, the largest US options exchange by volume, failed to open for several hours after a systems problem.
“That is unusual when a whole exchange has to be taken off [the national best bid or offer system]. When you’re being pulled off of that calculation, your exchange is acting crazy,”
“[Erroneous trades] happen from time to time; but the question is whether they are busted or honoured,”
And, just to make sure Goldman kept its 1.000 trading perfection record in the quarter, the WSJ adds:
NYSE officials, in a notice to traders, said they "anticipate that most of the impacted trades will be busted."
* * *
To paraphrase for anyone confused:
Q. Dear Goldman, did you by some accident lose money trading today?
Q. Would you like all that DK'ed?
Q. All set. Have a great day.
Oh... and Knight Securities, our condolences.
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