NYSE To Cancel Trades Beyond 30% Band From Opening Price In Various Stocks, Knight To Foot Bill For Balance?

Tyler Durden's picture

Update: NYSE has completed its review of the impaired stocks. Those are the only 6 stocks which will see trade cancellations:

15:54 ET 01 Aug 2012

 

MARKET: NYSE, NYSE Amex CATEGORY: Market Operations Update
The NYSE and NYSE MKT in association with all relevant regulatory authorities have concluded the review of this morning's CEE filing.  The six symbols listed below will be the only symbols with cancelled trades; no additional symbols will be considered for review.

 

This decision is not subject to appeal.

 

Symbols:

 

WZE at or above $4.68
CO at or above $3.22
UTG RT at or below $0.0497
EJ at or below $3.36
ARC at or above $5.71
KWK at or above $5.91

Just as the only response by the SEC and various exchanges to the May 2010 flash crash was to cancel all trades beyond a 20% band of the prevailing NBBO before the Flash Crash (in the process destroying any confidence that market crash perpetrators would be truly punished by forcing them to incur the full damage resulting from the consequences of their stupidity), so the NYSE has determined to unilaterally cancel all trades, initially in six stocks, but probably in all of the attached 140 symbols, in a move that will teach the offenders absolutely nothing, and will punish only those who took advantage of a broken market to incur one-time profits courtesy of a broken market structure. However, what it will also do, is likely make Knight directly liable for any losses incurred by traders from the opening price through the 30% breakage threshold. In other words, with Knight losing about $300 million in market cap today, investors are speculating that the net loss to the firm will be just that as it has to foot the bill. Considering the volume and breadth of the impaired universe, this will likely be very big underestimation of just what the final bill will be to Knight.  And isn't it ironic that Knight itself was until recently complaining about how much money it itself lost on the FaceBook IPO as a market maker...

From the NYSE:

CEE Review Determination for multiple symbols

 

14:57 ET 01 Aug 2012

 

The NYSE and NYSE MKT have determined to cancel all trades in the following six symbols associated with this morning's CEE for multiple securities. Trades executed 30% or more above or below the NYSE/NYSE MKT opening price today between 09:30:00 a.m. and 10:15:00 a.m. ET will be busted.

 

This situation is still under review by all relevant regulatory authorities.

 

Symbols:

 

WZE at or above $4.68
CO at or above $3.22
UTG RT at or below $0.0497
EJ at or below $3.36
ARC at or above $5.71
KWK at or above $5.91

And then the NYSE gave out this update as well:

Update: CEE Review Determination for multiple symbols

 

15:11 ET 01 Aug 2012

 

MARKET: NYSE, NYSE Amex CATEGORY: Market Operations Update
The NYSE and NYSE MKT encourage all member firms to keep their Common Customer Gateway (CCG) lines up and available after 4 p.m. ET today as some of the trade cancellations referenced in the prior message may not flow back until after 4 p.m. ET.

 

In addition, all associated tape prints will be removed from the Consolidated Tape after 4 p.m. ET

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malikai's picture

Be HFT or die.

Signed,

The SEC.

iDealMeat's picture

One more time:

William L. Bolster
Lead Director, Knight Capital Group, Inc., Retired Chairman
and Chief Executive Officer, CNBC International

Nominating and Corporate Governance Committee, Chair
Compensation Committee, Member
Finance and Audit Committee, Member

William L. Bolster, Lead Director of the Company, has served on the Board since November 2003. Mr. Bolster was Chairman and Chief Executive Officer of CNBC International from July 2001 to November 2003 and was a consultant to CNBC International until February 2004. Prior thereto, he was President of CNBC from January 1996 until July 2001. Previously, Mr. Bolster was President and General Manager of WNBC-TV in New York. Mr. Bolster received a B.A. in Business Administration from Loras College in 1967.

SilverTree's picture

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SilverTree's picture

No worries, the NYSE will have this cleaned up in a jiffy.

mudduck's picture

Waitress, I will have 2 of what this gentleman is drinking. Cheers.

CCanuck's picture

He's drinking Bollinger today, and buying a round for the house. Apparently he had a good day on the 'Markets'.

Enjoy!

 

Dubaibanker's picture

TFC- That's Fuckin Cool, eh?

veyron's picture

Traders yet again tvix'd

Dr Benway's picture

Some bizarre incentives introduced by the adhoc cancellations/non-cancellations...

 

How long until the algos include just those incentives in ther models? 

 

And then use crashes to profit?

 

Oh wait, that already happenend. I sound like a regulator, out of touch.

Hype Alert's picture

BINGO!

They just need to catagorize the algo's into:

A) well behaved - those that just skim your money

and

B) ill behaved - those that use aggressive tactics that skim your money up to SEC approved limits.

 

Sucks to be you.  Doesn't the SEC get a fee for each transaction?  Bonus!

Dr Benway's picture

LOL well put. But the algos can't be shut off now because there is no "market" without them anymore.

 

But I have a solution! We completely hand over control to the algos, and have them promise that the market will rise by 10% each and every year. That way, we would have no pesky random walk movement in prices, just a steady nice straight line slanting up.

 

Problem solved, everyone happy! Then governments could mandate that we put weekly pension money into this black box machine, and they would have solved the pension problem too.

 

This method is guaranteed to work fine until it doesn't and the black box is revealed as empty.

HD's picture

Maybe they shouldn't have run their algos using a discounted HAL-9000...

Dr. Richard Head's picture

All your trades are belong to us.

 

 

Sorry......someone had to say it.

MeelionDollerBogus's picture

What about ticker WTF or PNZI ?

HD's picture

You're on to something there - when's the IPO?

Sadly - the only stock I would go 100% long on is PNZI.

vast-dom's picture

MEAT SHACK IPO GO PNZI LONG IF BERNANKZI LIVES

emersonreturn's picture

thank you tyler as always you are the difference between Knight and day. 

e-man's picture

I really wish we could stop calling this a market.  It hasn't been a "market" for quite some time.

I think the "racket" would be more appropriate.

Hype Alert's picture

DONE! From now on I'll use Stock Racket.

El's picture

That's just...wrong. Now we are socializing screwups? Sorry little Johnny...if you jump over that cliff, then the rest of us will have to jump over it with you so you won't die all by yourself. Making you die by yourself just wouldn't be fair. /snarc

Dr. Richard Head's picture

Only flash crashes to the downside will be socialized.  Upside HFT vapor levitations can sit firmly in the hands of PD's and related Fiat Card Members.

Dr. Engali's picture

NYSE to retail investor: Screw you! We have to protect our own. We don't want another firm to blow up.....yet.

ZeroAvatar's picture

Oh, THAT'S why the stock's down 20%, BITCHEZ!

ebworthen's picture

30%?

Why not just reset the entire day, even back to 3:59 yesterday, considering.

Oh yeah, and allow trades one at a time, and require a human being to move three mechanical levers 180 degrees to execute a trade.

MillionDollarBoner_'s picture

...or reset to Feb 2008?

Fixed it !;o)

SMG's picture

This is criminal.  These machines are cheating everyone in the market, everyday.  So when your cheat doesn't work out, you get a do over.   What a SCAM!

disabledvet's picture

The machines exist to separate emotions from trading. And you...puny human...are nothing but a tumult of emotion. Just in case you thought "that was easy" let me introduce to MASS media and "see how well you trade then."

Seasmoke's picture

i won today..............no i lost today

to play in this minefield, proves only that you are a moron

Daily Bail's picture

I posted this earlier on another thread but thought I would add it here as well.

I've hated Knight Trading since 1999-2000 when we were shorting all the dotcoms and these fuckers were always faking bids on the Level III screens.  I got so pissed off one day I called the CEO and yelled at him for 2 minutes about market manipulation and then I hung up and we shorted 50,000 shares of his company as our way of saying "Fuck You, prick."

We made a little bit and closed the trade a week later.

My fav story was shorting Redback Networks in 1999 - they announced a huge secondary that would allow insiders to dump millions of shares, but instead of going down, the stock rallied because Cramer was long Redback at his hedge fund and he had used 2 CNBC appearances that day to say how fucking great the secondary was because it meant that institutions would NOW be able to get into the company in size.  What a complete crock of shit.  And anyone who was trading at the time will tell you that Cramer used this line of bullshit to perfection EVERY time there was a secondary announced for one of these low-float, recently-IPOed networking stocks.

So I emailed CNBC reporter Bob Costello, the grandson of the Abbot & Costello frontman, (whom I had never communicated with before) with a long screed about how the secondary would DILUTE, and that cramer was a fucking monkey spouting garbage.  And 15 minutes later, it was Costello's turn to report from the NAZ, and he immediately said 'I have this email just in from a Santa Monica based hedge-fund manager' and he proceeded to read my email ripping Redback and (Cramer the monkey) word for word on the air for about 45 seconds.

Meanwhile, I was sitting in my apartment in Santa Monica, on my couch, in my underwear, with the biggest smile I've ever had.  We were not really a hedge fund.  I had about $15 million under management at the time.  And I had just forged my way into a breathless Tom Costello CNBC report calling Jim Cramer a monkey.

I'm pretty sure it was the happiest moment of my life.

fonzannoon's picture

I once shorted a stock that I knew would go down and Cramer came on and talked it up. I don't know if he owned it but I was also on my couch in my underwear. I got up and yelled at the TV and then emailed some friends but that was as far as I got with it.

cougar_w's picture

That was funny as hell, thx for sharing.

SilverIsKing's picture

Was it Bob Costello or Tom Costello?  Your story sounds made up.

Daily Bail's picture

It was Tom Costello, not Bob, my mistake.  It's been almost 13 years since it happened.  And I understand that it sounds crazy.  Imagine how I felt, sitting there watching it happen.  I was 32 at the time, and I had worked at Alex Brown, then Bankers Trust, so I wasn't some neophyte trader.  But this was surreal to me. I got his email address from Ted David, a CNBC anchor that I was friends with online, thru the trading website that some here may remember, Silicon Investor.  Ted used to hang out there and post occasionally.

Ultimately, I didn't lie to Costello, other than telling him I was a hedge fund manager.  I was a trader/manager with $15 million AUM, working from my apartment, shorting all the bubble stocks, and every bit of info I gave him on Redback and the secondary was RIGHT.

Cramer was a fucking lunatic in those days, blatantly using CNBC to promote low-float internet stocks his hedge fund was holding.  He did it EVERY fucking day.  This was before Mary Meecker and Henry Blodgett got busted in their scandal.  So CNBC wasn't paying any attention to conflicts of interest, and they let Cramer do whatever the fuck he wanted.

For what it's worth, within 3 years, Redback had fallen to below $5 after trading at least as high as $200.

And here's Ted David's Wikipedia.  He was pushed out of CNBC in favor of hot chicks several years ago.  He was a good reporter, a former EMT, and a high school teacher, not some blow-dried, pump-wearing pussy like Bill Griffith.

 

http://en.wikipedia.org/wiki/Ted_David

Everybodys All American's picture

Cramer is a still doing the same thing he's just doing it now for his 'trust'. CNBC is complicit. The criminals no longer get prosecuted and in fact http://markets.financialcontent.com/prnews/news/read?GUID=21912068 look at the impact this has on GDP. The stuff that Cramer does today would never have been tolerated just a few years ago.

I'm not surprised that NBC is involved because they are as corrupt as there is in the media and have been for a some time.

disabledvet's picture

First Knight...next stop the GOLDMAN SACHS.

EclecticParrot's picture

Veterinarian to Mrs. Cramer several decades ago:  "Here you go -- I'm happy to report it's a healthy baby monkey.  No, no -- flip him over, the head's on the other end."

The Axe's picture

great story....Nite is the king of overlapped markets......

disabledvet's picture

How's your Facehugger short doing? Those guy's are worth billions right now.

slaughterer's picture

These are penny stocks.  KCG is getting off easy.

fonzannoon's picture

Yeah no shit what happened to UNG and F and VZ?

Fartiroma is on right now praising the fed for leaving the language alone today and letting everyone know how effective the LTRO programs have been.

I am guessing we get another LTRO tomorrow now.

mrdenis's picture

I trade GOV 5,600,000 shares traded this AM down to 20.7 ,the stock came back somewhat to 22 after opening @ 23 ...I bought a total 5000 sh with avg px 21.22 ...if he's short it will take a while to cover average day vol is 250K ....I was truly surprised it didn't come back to the 23 level ....it's a great income reit

azzhatter's picture

Honestly is there a better tool of the establishment than Maria Myfartshavearoma? Such a pathetic bitch this whiny c*nt is. Not even worth a good bitch slap

cougar_w's picture

JNPR trades at $15. JNPR was blitzed all morning, volumn was up on the NYSE by about 200% due to the screwup. Maybe $200M changed hands in 30 minutes that has to be reversed now, who knows what the damages will be.

Haager's picture

Let those systems die -

NYSE don't care shit if others suffer due to stop-loss breaches and margin calls due to such f++king algo-trades.

FoxMulder's picture

NYSE called 1-800-SERVPRO. Like it never even happened.

The Axe's picture

Guys on the desk  tell me 100 million loss for NITE    holyshit storm

cougar_w's picture

Hey NYSE, I accidentally bought high and sold low today -- don't know what happend, just one of those things -- so could you cancel that trade for me while you are at it? k thx

DeFeralCat's picture

This just in: 1000 Knight employees seen packing and leaving the Jersey City office.