Hat tip Alphaville

 

Hey look, its not just the US’s capital market that have been hollowed out by HFT — India’s as well. Not quite a 1000 Dow points, but keep working on it — you’ll get there!

 

Category: Markets, Regulation, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “India’s Flash Crash”

  1. vachon says:

    Anyone got the technicals on it yet?

  2. 873450 says:

    Move along folks.
    Just keep walking.
    There’s nothing to see here.
    At no time was the system ever at risk.
    Authorities are calling it a harmless glitch.
    Built-in safeguards effectively protect markets against destabilizing events.
    Avert your eyes.
    Don’t look at it.
    Like we said, there’s nothing to see.
    Keep walking.
    Don’t worry.
    Nothing happened.

  3. jonas says:

    Mark Cuban is right that HFT are just hackers. Exchanges (both people and institutions) are not suited to dealing with hackers, and so breakdowns are inevitable.

    Sci fi writers wrote stories 20 years ago about hackers hacking bank accounts as a business activity, but it turns out exchanges are easier, more profitable and legal. Who’da thunk?

  4. athreya74 says:

    Looks like the Indian flash crash was not due to HFT although predictably government is talking about investigation. Per this bloomberg story

    http://www.bloomberg.com/news/2012-10-05/nse-probing-freak-trade-that-caused-price-error-on-bourse.html

    it was due to fat finger mistake at a brokerage that led to erroneous orders being transacted. That said it is puzzling how the market levels blew through the circuit filter.

  5. DeDude says:

    Triggering automatic sell orders is very profitable. These things will get to be a lot more common.

  6. deepakshenoy says:

    It was bigger than the 1000 point Dow fall – our index circuit breaker was triggered (which is at a 10% fall) and before it did, the last print was more than 15% below.

    Supposedly a fat finger trade but it doesn’t add up – you can enter “basket” orders to buy stocks in the proportion of an index, and that supposedly was entered at 10x the required quantity by a broker (on behalf of an institution). It’s a little strange, because the official press release says 59 orders triggered the fall which was NOT an algo or HFT trade, but the index in consideration has just 50 stocks.

    Anyhow, given that HFT does exist in India, they will only magnify the potential move in such a situation. The broker, though, has lost Rs. 800 million ($16 million) which pretty much wipes off its entire annual revenue. The exchange isn’t willing to annul the trades – a good thing, in my opinion, since such an annulment is blatantly unfair.