Yesterday's market swerve: fat fingers, glitch, or cyber-warfare

(ZT from : http://money.cnn.com/2010/05/07/markets/market_swerve.fortune/index.htm)

1) The fat finger. Plausible, but unlikely. Typing in billions with a "b" versus millions with an "m" seems impossible. Trading systems don't work that way. More likely, the trading system accepts the sell/buy amount in thousands. Some trader in the heat of the moment forgets it's in thousands, types in an order for 16,000,000 instead of 16,000. That kind of thing seems far more plausible.

But even then: why on Earth would the trading entry system not have a sanity check? For almost no one in the world is a $16 billion sell order okay to send out as soon as it's entered. The trader should be fired, along with everyone in the IT department. If this happened, most likely, it was something along those lines. If it wasn't all one order, maybe it was meant to sell just $1 billion shares but was sent 3 or 5 times instead of once.

2) Software error. Plausible, likely, but doesn't fit the facts. Here, the trading software is in a recursive loop, pounding out sell orders due to a bug somewhere in the software. In a sense, this is more plausible, more likely, but doesn't seem to fit the facts well enough.

The speed of the decline in the market just doesn't seem to fit -- should be a series of small orders, not a series of large orders. In 7 minutes we saw a 580-point drop. That doesn't look like a recursive loop. But there is a lot of software, and somewhere a bug is bound to exist. You can easily imagine a software glitch happening. Things go buggy. Like the Toyota [accelerator] problem, at heart a software problem. Technology is a two-edged sword, and this is the other edge of the sword. We rely on software, but it's not always written well enough.

3) Computer hacking. Implausible without proof, but possible. This is the most interesting theory because we know terrorists are interested in cyberterrorism. We know they would target the financial markets. We know a great day to launch an attack would be one with a mild bit of panic [due to the Greek crisis and sovereign debt downgrades].

Some other really crazy things happened with stocks, like Accenture and Exelon. [Both stocks traded for one cent for short periods of time.] Two parties really transacted on these trades [at one cent], even though they were later busted and cancelled. If it was just high-frequency traders bailing out, why wouldn't [that drop] happen on every stock? It just doesn't add up. Things are too idiosyncratic and that feels uncomfortable. This also happened in the options markets, but again, only on a handful of options.

所有跟帖： 

• 多项选择，我选 3) Computer hacking. -SouthernCal- ♀ (41 bytes) () 05/07/2010 postreply 16:47:28

• I think it is terrist computer hack, taking chance of the Greek -wonder1- ♀ (121 bytes) () 05/07/2010 postreply 17:16:24

• 回复：Yesterday's market swerve: fat fingers, glitch, or cyber-warf -不可复识- ♂ (136 bytes) () 05/08/2010 postreply 15:00:04