Money Matters - Simplified

Nasdaq cancels trades of 286 securities that shed over 60 percent

The Nasdaq OMX Group declared that it will cancel trades involving stocks that saw sharp volatility at the height of the market’s steep intraday decline Thursday afternoon.

The Nasdaq OMX Group Inc. (NDAQ) has decided to annul trades of 286 securities made Thursday between 2:40 p.m. Eastern Time and 3 p.m. Eastern Time.

All these trades were made just before the U.S. equities nose-dived. All these trades were "greater than or less than 60% away from the consolidated last print in that security at (2:40 p.m.) or immediately prior."

“The market went into a panic. No one made markets. You had all the machines trying to [sell] things into an abyss,” said Peter Boockvar, equity strategist at Miller Tabak.

The crash
Close to $700 billion of U.S. stock- market value was lost within 10 minutes due to the equities crash. Nasdaq has confirmed that the trades will be canceled "on the participant's behalf."

After a thorough scrutiny, Nasdaq, could not find any technology or system that had led to the equities plunge, which, in some cases was as high as 99.9 percent.

The Dow Jones Industrial Average dropped almost 1,000 points only to recover dramatically. In the end, the index recovered smartly to be down 347.80 points and closed at 10,520.32.

“Somebody hits the wrong button and everybody heads through the same door at the same time. It clearly was a factor. When you have a lot of skepticism and nervousness in the market place, that just exacerbates the problem,” opined said David Goerz, chief investment officer at Highmark Capital Management in San Francisco.

"In my 25 years in the business I have never seen bonds have that type of move in a 20-minute period," said Tom Digaloma, head of bond trading at Guggenheim Securities.

The roller coaster
The Dow Jones Industrial Average dropped almost 1,000 points only to recover dramatically. In the end, the index recovered smartly to be down 347.80 points and closed at 10,520.32.

The Nasdaq Composite declined 82.65 points, or 3.4 percent to 2,319.64.

Stocks of many companies including those of Accenture Plc and Exelon Corp. went in a tizzy and shed over 60 percent of their values.

By the end of the day, however, some of the equities that had tumbled recovered to show a semblance of stability.

Stocks of the second-biggest technology consulting company, Accenture, plunged as much as 99 percent to a penny.

The stock closed down 2.6 percent at $41.09. However, all trades executed below $17.74 have been canceled.

There was a questionable trade in the world’s largest consumer products company, Procter & Gamble. Officials at the Cincinnati-based behemoth however averred that stock trades that pushed its shares down were, in all probability, an error.

Rumors were rife that a trader, by mistake, made a sell order for billions of shares of the e-mini futures traded at the Chicago Mercantile Exchange, which triggered the collapse.