Caught this off CJR
You remember back when we had that flash crash on the stock market? The market lost a staggering number of points, then got them back just as fast.
The WSJ reports that the SEC is looking into quote stuffing as a potential factor in that mess. Quote stuffing is flooding the market with orders that are visible enough to influence other trades - but are canceled before they are completed.
Head-faking the market, in other words. But how bad could these signals be?
According to the WSJ - which uses the NASDAQ trading volume of Feb 18, 2010 as an example.
There were offers to buy or sell 89.704 billion shares on NASDAQ that day.
These offers resulted in 1.247 billion shares being traded.
That's a completion rate of 1.3%
Chittum says "Dang" - I'd use something a bit stronger.
Sure, offers to buy and sell will outstrip what can actually change hands - but 98.7% of all offers on the NASDAQ don't happen?
Really?
I'd love to see that metric plotted over a the life of the NASDAQ.
1 comment:
I suspect that some trade software worked a bit too good. 'They' wanted to just create blips 'they' could trade on, but it went all 'danger danger Will Robinson' on their ass. Hopefully the 'they' will be exposed if not prosecuted. These things are apparently easy to stop, but note as yet NOTHING has been done.
I'm a bit surprised the legitimate market IRA/401K is not screaming foul, it's their industry that gets hurt. Makes me wonder if there is such a thing as legit as far as the market is concerned.
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