Thursday, May 6, 2010

The errant trade, could it have been in Procter & Gamble shares? (PG)

The DJIA's massive plummet earlier today is being investigated. Some are speculating that it was a trading error, but it's unclear exactly how that happened. For instance, if you instant messge your trader (yes, that is how a LOT of Wall Street trades are executed) to sell a BILLION PG shares because you're a moron, that trader isn't going to turn around and offer the same billion to the market...he's simply not dumb enough, and there's no point in him trying to game the mistake b/c the trade would be cancelled.

This "B instead of M" typo might have been using another software system, but most of these are built to "override" or at least raise a flag in a case like this. Even a trade of one million PG shares would be a HUGE amount for stock with average daily volume of 10million. An order to sell a billion shares would be more than 1/3rd of all Procter & Gamble common stock in the world.

Here's Cramer live, he's absolutely right that "those aren't real trades!!!"

Someone may be getting fired today, but what a story they'll have to tell....

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