Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
In reply to the discussion: STOCK MARKET WATCH -- Wednesday, 21 August 2013 [View all]Demeter
(85,373 posts)30. Goldman Sachs technical error causeD erroneous U.S. option trades
http://www.reuters.com/article/2013/08/20/us-nasdaq-trades-idUSBRE97J0R920130820
A flood of erroneous trades hit U.S. equity options markets on Tuesday as they opened for business when Goldman Sachs Group (GS.N) sent orders accidentally because of a technical error, the latest trading problem to hit the options market this year. Major options exchanges including platforms run by CBOE Holdings (CBOE.O), Nasdaq OMX Group Inc (NDAQ.O) and NYSE Euronext (NYX.N) said they were reviewing the trades, sent in roughly the first quarter hour of trading and affecting options on shares with listing symbols beginning with the letters H through L.
Exchanges have the option to adjust prices or nullify, or "bust," the trades if they are determined to have been made in error. NYSE Euronext's NYSE Amex Options market said it anticipates most of the trades will be canceled. Goldman Sachs said in a statement the firm does not face material loss or risk from the issue. The firm declined to comment further. A person familiar with the problem, who declined to be identified, said the cause was a computer glitch in which indications of interest in equity options were sent as actual orders to the exchanges. Some of the orders were filled, while others were not.
Options market participants said the activity struck promptly as the market opened.
Many of the orders on some of the options for those stocks were 1,000-contract blocks traded for $1 per contract, WhatsTrading.com options strategist Frederic Ruffy said. Stocks whose options saw some of the order flow included Johnson and Johnson (JNJ.N), JPMorgan Chase and Co (JPM.N) and Kellogg Co. (K.N), Ruffy said. Options on some exchange-traded funds, such as the iShares S&P Small Cap Fund (IFR.P), were also affected, he said. Potential losses could range in the millions of dollars, the source said, but it was unclear just how many transactions were involved and what any final cost would be.
A flood of erroneous trades hit U.S. equity options markets on Tuesday as they opened for business when Goldman Sachs Group (GS.N) sent orders accidentally because of a technical error, the latest trading problem to hit the options market this year. Major options exchanges including platforms run by CBOE Holdings (CBOE.O), Nasdaq OMX Group Inc (NDAQ.O) and NYSE Euronext (NYX.N) said they were reviewing the trades, sent in roughly the first quarter hour of trading and affecting options on shares with listing symbols beginning with the letters H through L.
Exchanges have the option to adjust prices or nullify, or "bust," the trades if they are determined to have been made in error. NYSE Euronext's NYSE Amex Options market said it anticipates most of the trades will be canceled. Goldman Sachs said in a statement the firm does not face material loss or risk from the issue. The firm declined to comment further. A person familiar with the problem, who declined to be identified, said the cause was a computer glitch in which indications of interest in equity options were sent as actual orders to the exchanges. Some of the orders were filled, while others were not.
Options market participants said the activity struck promptly as the market opened.
Many of the orders on some of the options for those stocks were 1,000-contract blocks traded for $1 per contract, WhatsTrading.com options strategist Frederic Ruffy said. Stocks whose options saw some of the order flow included Johnson and Johnson (JNJ.N), JPMorgan Chase and Co (JPM.N) and Kellogg Co. (K.N), Ruffy said. Options on some exchange-traded funds, such as the iShares S&P Small Cap Fund (IFR.P), were also affected, he said. Potential losses could range in the millions of dollars, the source said, but it was unclear just how many transactions were involved and what any final cost would be.
"There is no real obvious way to tell how much this cost traders," said Ophir Gottlieb, managing director of options analytics firm Livevol based in San Francisco. "But the ones that are hurt the most are likely the market makers who provide liquidity and are the counter parties."MORE
Edit history
Please sign in to view edit histories.
32 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
RecommendedHighlight replies with 5 or more recommendations
![](du4img/smicon-reply-new.gif)
ObamaCare’s Relentless Creation of Second-Class Citizens (6) By lambert strether
Demeter
Aug 2013
#6
The White House's Economic Agenda: Obama Destroys the Middle-Class By Mike Whitney
Demeter
Aug 2013
#7
Abracadabra: You’re a Part-Timer! How Corp. America Used Great Recession to Turn Good Jobs Into Bad
Demeter
Aug 2013
#9
Justice Kagan Reveals That The Supreme Court Is Totally Technologically Challenged
xchrom
Aug 2013
#18
Summers, Yellen allies wage behind-the-scenes effort to win Federal Reserve nod
Demeter
Aug 2013
#31