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The "Historic NYSE Halt" Post-Mortem: The Shock And Awe When It All Went Down
What began as a glitch in pre-market trading turned into the NYSE's longest trading halt since Hurrican Sandy battered the East Coast. The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break. While NYSE traders defended the very market structure they have abhorred in the past as evidence that today was "not a failure," we can't help but find CNBC's Scott Wapner's amusing remark that "if retail investors want low cost liquid trading they are going to have learn to live with it" the perfect post-mortem for a rigged system brimming with confident insiders ever excited to take mom-and-pop's money.
As Bloomberg reported, "What began Wednesday morning with a seemingly workaday software glitch soon escalated into one of the most startling computer outages in Wall Street history -- and, for the Big Board, a race against the clock."
At the 9:30 a.m. opening bell, traders’ orders for some stocks weren’t reaching the proper destinations for processing. Techies were frantic to fix the problem. At about 9:32 a.m., they succeeded.
Two hours later, boom.
One floor trader started shouting, “My handheld’s down! My handheld’s not working!” He and other traders hurried over to a ramp on the trading floor where NYSE executives usually meet with them to explain any problems. Not today. Three hours later, still nothing. Everyone was just standing around.
“The order flow wasn’t being entered into the display books on the trading floor,” said Pete Costa, president of Empire Executions Inc. who’s worked at the exchange in downtown Manhattan for 34 years. “As soon as that happened, the exchange shut down to understand what was going on.”
Every computer screen “went this pukey, canary yellow color,” Costa said. “That means the stock has stopped trading.”
NYSE BREAK #1 Occurred shortly before the market open as the SNB-driven rebound from overnight weakness was beginning to fade...
Stocks rallied into the open while the NYSE was broken.
The issues were resolved shortly after the market opened... and stocks then plunged:
The tumbling stock market meant there was only one option:
NYSE BREAK #2 Occurred shortly before the European close...
And once again... stocks ripped higher and the world rejoiced that Greece and China didn't matter after all.
But then, once that problem was resolved, stocks plunged again, which left only one option for the PPT which learned its lesson from China where if there is selling, just halt the stocks being sold.
NYSE BREAK #3 - The Big One started shortly after the European close with stocks near the lows of the day...
CNBC went into full "turmoil" mode:
And this happened:
The NYSE CEO told CNBC that he "didn't know" if the early halts and glitches were related to the catastrophe that halted the entire exchange for almost 4 hours. Well as a help for him, here is a simple chart from Nanex that shows the last group of trades before the NYSE Blackout were in the same stocks they reported an issue with earlier in the day...
Simply put - they were related.
Why does the market break? Here's why: an ever increasing level of complexity in the market structure (as machines game each other to death)...
... Meets an ever-decreasing pool of greater fools:
But why 4 hours?
RUHLE: Why not roll over to your fail system, your backup?
FARLEY: We chose the least disruptive option for customers. So if we had moved to our Disaster Recovery Center, which was an option, customers would have had to do a good deal of work to be able connect to that new Disaster Recovery Center.
Contrast that with what we chose to do, which was root out the problem, put a plan in place to fix it, fix it, reopen the New York Stock Exchange, and there was no work for the customers to do to connect to the New York Stock Exchange.
So, to summarize, the NYSE has a disaster recovery center which... they choose not to use because it is an inconvenience to clients who would rather be unable to trade!
Maybe there was a different angle altogether: with China crashing and halting 70% of the market, the US had just one response:
China: We'll halt 70% of our stocks
US: Oh yeah, we'll halt the world's largest stock exchange— zerohedge (@zerohedge) July 8, 2015
Here is the "official" reason according to the NYSE CEO:
RUHLE: And do you attribute this to a system upgrade?
FARLEY: I'm not 100 percent certain, because as I said, most of the day I spent with customers and staff. There was a configuration problem in our system. It likely had to do with an upgrade, but that is premature, and it's something that will come about as part of a full analysis of the situation.
Of course it's not the first time NYSE has been halted (as MotherJones reports)
It's not the first time a random event has interrupted the 223-year-old stock exchange. Most memorably, the NYSE closed following V-J Day, when troops returned at the end of World War II, and for three full days after the terrorist attacks of September 11, 2001. But the NYSE has closed for everything from the funerals of major world figures—such as Queen Victoria of England (1901), Rev. Martin Luther King, Jr. (1968), and Richard Nixon (1994)—to extreme heat (August 4, 1917).
Here is a brief history of events that halted trading at the New York Stock Exchange.
September 1873: The collapse of the Jay Cooke & Company, a major financial institution, caused the New York Stock Exchange's first closure, for 10 days, due to market calamity.
July 1914: The start of World War I in Europe shuttered the exchange for four months, the longest closure on record.
May 25, 1946: The NYSE shut down due to a railroad strike, part of one of the largest waves of strikes in US history.
1967 – 1996: Over this span of 29 years, eight ferocious blizzards either delayed the opening bell or closed the exchange early.
February 10, 1969: A snowstorm dubbed the "Lindsay Storm" shuttered the stock exchange for a day and a half amid 15.3 inches of snow.
July 21, 1969: This closure was planned, to celebrate the Apollo 11 moon landing.
July 14, 1977: The NYSE closed due to a major blackout across New York City.
October 27, 1997: A failsafe instantaneously stopped all trading for 30 minutes after the Dow Jones Industrial Average plunged 350 points.
May 6, 2010: The same circuit breaker that closed the NYSE in 1997 halted trading after a "flash crash" caused by automated high-frequency trading.
September 11, 2001: Terrorist attacks closed the exchange through September 14. The exchange also closed exactly a year later to mark the anniversary of the attacks.
October 29 – 30, 2012: The NYSE shut down while Hurricane Sandy battered the Eastern Seaboard. It was the first time a weather event closed the market for two full days in 124 years, after a snowstorm that dumped more than 40 feet of snow closed the exchange in 1888.
And won't be the last: as we wrote last year, the entire market is now like the infamous "social-network" stock CYNK that never existed: it too was pumped up to ridiculous valuations on no volume, not to mention no revenues, no profit and no employees ... and then when the selling began it was quietly halted.
Permanently.
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glitch = no bid
my offer is this: nothing... [/michael corleone]
Ironically enough, the markets functioned as originally designed [price discovery] today. People could trade in "realistic" times, and not have to worry about <quote stuffing, spoofing> algo's trying to sniff any bid/ask with a pulse in this corpse of a market.
president of Empire Executions...
Is that like Aztec Exterminators?
My only concern is whether or not my book of "forever stamps" from the post office are still good after the real shit and piss show finally happens.
I'd imagine not. <-----sucker!
hidden cyber attack?
Experts say best defense is a warning system designed to flag breaches and hacks.
The NYSE halt wasn't a failure of technology - but a victory???
latest:
http://tersee.com/#!q=nyse&t=text
SEC now frantically searching garages and basements for the lone wolf immigrant trader from India who must have caused all this. Because, after all, someone has to be held responsible for it.
It will be Jared from Subway (formerly). Oh wait...he's just got the SEC's child porn.
Reminds me of using Windows 95 in the late '90s. "This program has performed an illegal operation and will be shut down. Word has caused an invalid page fault at module shell32.dll."
Translation: You are fucked.
Ah, the good old days when Windows just lost your data instead of sendind it all to the NSA.
The real glitch will come when you go to your bank one Monday morning and it's "closed for holiday" and you can't figure out what the fuck holliday iti is.
So.... "Glitches be crazy!". Or, "Wassup my Glitches?"
If you didn't get out of longs today, you're a fucking idiot.
Now is the time to get in..maybe wait till Yellen speaks and eats "interest rate hike crow", then up up and away. This will be the "long squeeze" now setting all up for another "short squeeze". You will see within 2 weeks.
is that a prophecy?
In 2 weeks the market will hit new highs and all is "awesome" again or not.
Dow to 30,000 ill wager!
I think somebody already mentioned this but it is an interesting tweet from anon...
Or, the PTB, predicted the need for a halt, called the agency and told them to provide cover via Aonymous.
"Where is the rebel base?"
"Mahwah. Mahwah, NJ."
A black cat went past us, and then another that looked just like it.
It just occurred to me that the oddity of all this is heightened -- not only the NYSE crap going on, but for those of you out of the bitcoin loop, the last two days there's been a "spam" attack on bitcoin, and currently somewhere close to 100K bitcoin transactions are unconfirmed due to it. Pretty odd that the attacks on financial entities span from NYSE to bitcoin.
It will be interesting to see if there are signficantly banking system events within the next few days (either hacks or fireworks.)
Maybe the Chinese know who actually owns Bitcoin as well... given that JPM holds the patents.
Nobody owns bitcoin, its public domain. For that it can not be patented.
?? JP Morgan owns the patents on the technology Bitcoin uses.
I am sure you realize that Bitcoin is the international bankers' wet dream, a 100% electronic currency. Why wouldn't they develop it and throw it out in the market as a test run to see how it works and is accepted?
It is not anti-bank/pro-freedom. It IS the bank and more complete slavery.
Personally, I would take a less liquid free market over a liquid rigged market any day.
LOL, fucking Cramer... telling the sheep to buy.
http://www.cnbc.com/id/102819450
interestingly the decline in volume correlates with the retiring baby boomers cashing in their 401k and the lack of 401ks available to employees.
the myth of real price discovery in the stock market is exposed by the role volume plays in equity valuations. no money equals no value despite a company's fundamentals. the values have been maintained by legerdemain but everyone is beginning to catch on especially with such a huge disconnect currently between fundamentals and price. the problem is there are no buyers because there is no money and there will not be sufficient participants to thwart a selloff so the result will be exagerated. the .1%ers will have to buy this market with their own money to save the rest of their money.
Another interesting item today was <X> sending out a notice at 0331 CDT, but with a date from 2014 that in my case updated or established an online ID. They send out a disregard at 1716 CDT and blamed it on a "technical issue".
Sure seems to be a lot of these alleged "technical issues" throughout the financial industry over the last few weeks.
What is worrying is that when one hears "issues" in US english, the speaker is usually referring to problems that they lack the technical competence to understand and solve.
I think this comedy show may be just getting started...
40 Feet of snow... That's a lot of white shit, Batman! Just sayin'
!
I'm getting worried: Even ZH is beginning to figure out how the system is totally rigged!
So the U.S. Involvement in the stock market has been occurring since the 1800's? Can I ask why everyone is so excited about what China is doing??? Please??? Communism/Socialism has exitsed in our society forever. How much longer can we stand by and patiently watch this socialist experiment?
WALLSREET got rigged by our own government today.. I don't believe china had anything do with it. MAYBE the in flows of sell orders had to stop in order to prevent a meltdown.. ZEROHEDGE on the other hand is a crime against the freedom of speech. I mean where else are you going to get the truth from!
Crony capitalism exists here and where in trouble. I am sick and tired of the dumb zombies walking around that believe everything the bull shit media panders to them.. Lucky for me I trade the forex market where itnis probably the only free-market that is left..
Stack On
Roger, I just wished I would have know when I bought pms a few years ago that the end would not really be as endish as it is now and they would be as cheap as they are now.
Its a distorted mirror walk thru like at a carnival.
"The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break"
And no established financial publications to suspect these repeated DOWN things... :-) WTF lol
the sheep are set up for slaughter!
I think the experts have it under control.
Smooth sailing from here on.
Why are you looking at me like that?
Tit for tat.
On crack.
What's the excuse going to be tomorrow? Stopping the sell on one day doesn't mean the would-be sellers suddenly want to keep their stock tomorrow. Gonna have to be something else lest they are viewed as incompetent.
The herd is nervous. It looks like a twist in the chute just before the killing floor. The timing with China and its market problem seems more than a coincidence. I can't and don't believe the NYSE statements on its reasons for the market closure. Another way to look at it is to expect the NYSE to lie, it is self preservation. Expect a blood bath.
does it mean the GDP will be less one day trading?
How does the market rip higher when it is "broken"? I thought no orders could go through. Can someone answer this?
A lot of stocks that trade on the NYSE also trade on other exchanges.
Slightly OT :)
I had to look up that incredible claim for October 29 – 30, 2012 that supposedly "dumped more than 40 feet of snow closed the exchange in 1888."
Per https://en.wikipedia.org/wiki/Great_Blizzard_of_1888, "Snowfalls of 20–60 inches (51–152 cm) fell" and "and sustained winds of more than 45 miles per hour (72 km/h) produced snowdrifts in excess of 50 feet (15 m)."
Not exactly the same thing, but interesting.