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Barclays "Glitch" Caused Tuesday's Market Freakout

Tyler Durden's picture




 

Barclays just can't catch a break these days: after creating the biggest "bad bank" 5 years into the laughably called "recovery", the latest batch of terrible earnings and the announcement of some 19,000 pink slips to be handed out shortly as the British bank has now lost all benefits from being presented the only valuable Lehman assets on a Blue light special platter 5 years ago, it now appears that the desperate and flailing bank also has placed monkeys in charge of trading because as Bloomberg reports it was also responsible for the freakout that hit a vast number of stocks at 3:49:00 pm on Tuesday and which we profiled in "Is There Anything Wrong With These Charts?" It appears the answer was "yes."

From Bloomberg:

A trading error at Barclays Plc this week caused split-second swings in dozens of U.S. stocks including AOL Inc. and Caterpillar Inc., according to people familiar with the matter.

 

Barclays moved the prices of some shares on May 13 after orders tied to the close of trading were incorrectly entered, causing the transactions to be executed immediately, the people said. Barclays clients weren’t affected financially by the error, according to one person, who asked to not be identified because the details haven’t been made public.

 

Kerrie Cohen, a spokeswoman for London-based Barclays, declined to comment.

 

The mistake whipsawed companies such as AOL, Caterpillar, Nabors Industries Ltd. and Nasdaq OMX Group Inc. According to Winnetka, Illinois-based Nanex LLC, which tracks trading disruptions, at least 28 stocks were affected, with AOL moving the most: a decline of 11 percent. Within a second, prices largely returned to where they’d been before the error.

And this is what happens when in a market as broken as this, one uses market orders - everything breaks. For those who have forgotten it, here is the snapshot highlighting the freakout that took place amid numerous unrelated stocks at exactly the same time:


1. AOL.



2. CNQ.



3. LO.



4. NBR.


 

The only good news: at least this latest confirmation of just how fragile this rigged and broken market is, wasn't blamed on a "glitch." Oh wait, nevermind.

 

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Thu, 05/15/2014 - 11:44 | 4762767 AccreditedEYE
AccreditedEYE's picture

Mr. Valentine has set the price...

Thu, 05/15/2014 - 11:50 | 4762788 NotApplicable
NotApplicable's picture

"Testing... 1... 2... Testing..."

Thu, 05/15/2014 - 11:53 | 4762792 SWCroaker
SWCroaker's picture

This new red/green stock DIY HFT package is just the bomb, boss!   We're gonna be on easy street in a week!

Thu, 05/15/2014 - 12:04 | 4762843 knukles
knukles's picture

Commercial banks can fuck anything up.  Anything.

Thu, 05/15/2014 - 12:35 | 4763007 Arius
Arius's picture

Cant do things on the cheap ... if they are going to fire people on mass, such "glitches" are to be expected ... it could be a domestic terrorist if you know what i mean ...

Thu, 05/15/2014 - 13:21 | 4763185 Pool Shark
Pool Shark's picture

 

 

Of course they're using monkeys!

Monkeys have no collective bargaining skills and lower healthcare costs.

Duh...

 

Thu, 05/15/2014 - 12:35 | 4763008 Arius
Arius's picture

Cant do things on the cheap ... if they are going to fire people on mass, such "glitches" are to be expected ... it could be a domestic terrorist if you know what i mean ...

Thu, 05/15/2014 - 12:40 | 4763017 Say What Again
Say What Again's picture

I've been trading for a long time now, and I've had my share of "mistakes" when entering an order.  I've tried to call the trading desk and begged to have the order reversed.  You can imagine the laughter on the other end of the phone.

These mistakes have made me be very careful when I touch the keyboard or click the mouse.  But these large banks get a do-over when they mess up.

If they had to eat all the losses from their algos-gone-wild, I think things would be different.

Thu, 05/15/2014 - 12:16 | 4762896 Cathartes Aura
Thu, 05/15/2014 - 12:24 | 4762937 eatthebanksters
eatthebanksters's picture

HFT...totally legit...nothing wrong with starting the day ownng nothing and ending the day owning nothing yet making a vig off everyone else's trades.  Isn't that what bookies do?  Don't you go to jail for being a bookie? WTF....I think the guvmnt wants HFT becasue it drives ridiculous volume and 'boosts' the market.  If HFT went away would QE be enough?  What a fucked up deal...

Thu, 05/15/2014 - 11:46 | 4762774 Dr. Engali
Dr. Engali's picture

Damn rogue traders are everywhere.

Thu, 05/15/2014 - 11:47 | 4762776 Cathartes Aura
Cathartes Aura's picture

nationstates, currencies, corporations, stocks, banks. . .

all fictions created to pump up,

then dump

when the timing is ripe.

*poof*   gone.

Thu, 05/15/2014 - 11:49 | 4762782 assistedliving
assistedliving's picture

Barclays...the gift that keeps on giving

and GS, Citi, JPM, HSBC, DB, CS, RBS, etc etc etc see a trend here?

Thu, 05/15/2014 - 11:59 | 4762826 medium giraffe
medium giraffe's picture

Yep, another fine example of systemic fragility.  A balls up by one small department in a single institution impacts a disproportionatly large number of companies across major indicies.

Now what do you think is going to happen if the derivatives market implodes?

Feeling lucky?

Thu, 05/15/2014 - 12:06 | 4762853 riot-police
riot-police's picture

"Barclays clients weren’t affected financially by the error, according to one person,"

 

Yea right-- This is exactly how traders get screwed.

 

Stops are hit.

 

Which should not be hit, except for some catastrophe, not on a regular basis.

Thu, 05/15/2014 - 12:15 | 4762891 medium giraffe
medium giraffe's picture

You just have to adapt to conditions and widen your stops by a couple of thousand points.  It might make your R:R a little lopsided, but no biggie, it's fine.

Thu, 05/15/2014 - 12:19 | 4762916 riot-police
riot-police's picture

It must be real "handy" to be able to spike the price and have it return to the same level a milisecond later.

Thu, 05/15/2014 - 12:34 | 4762981 medium giraffe
medium giraffe's picture

Certainly one way of generating liquidity.  Might be worth setting some entry orders out beyond a std dev or two.  You never know, you might get lucky one day and be able to buy a few Greek islands, found your own country and set up your own Central Bank. 

If you ever come across an emerging nation called 'Giraffistan', you'll know what's happened.

Thu, 05/15/2014 - 12:17 | 4762908 Bold Eagle
Bold Eagle's picture

So Barclays is also on the stock fixing committee?

Thu, 05/15/2014 - 12:41 | 4763024 earnyermoney
earnyermoney's picture

Lots of empty seats in nexy years Barclay's Premier League fixtures.

Thu, 05/15/2014 - 12:50 | 4763066 Squid Viscous
Squid Viscous's picture

Attention: the casino is closed... you may redeem your remaining chips for a shit sandwich in the lobby

Thu, 05/15/2014 - 12:53 | 4763076 timmeh
timmeh's picture

nothing to see here...

Thu, 05/15/2014 - 16:02 | 4763827 ebworthen
ebworthen's picture

Disgruntled employee?

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