Another story today about the relationship between technology and human discretion. Apparently, Google picked up an old story that was undated on the internet (really from 2002), and re-posted it as a story from today: that United Airlines was headed for immanent bankruptcy. Wanna see what happens when people suddenly think that you are a company going bankrupt?
NASDAQ’s response was to tell investors, tough cookies:
Once trading resumed 90 minutes later, UAL shares rebounded, but they still closed off 11% for the day at $10.92. Nasdaq, a unit of Nasdaq OMX Group Inc., said that it had reviewed transactions involving UAL shares during a 13-minute period before the halt and that all trades will stand. A trade for 100 shares at a penny apiece occurred on another exchange after the trading halt on Nasdaq and was later cancelled.
The reason for NASDAQ’s response is worth noting, even if it is not noted. Exchanges have a deep stake in defending the view that there are market errors, and then there are human errors. And a market error – an error that implicates the platform and mode of trading itself in the systemic mucking up of financial transactions – is deeply problematic for exchanges. Attributing the error to human errors – that buyers/sellers correctly placed orders which were correctly matched – allows exchanges to maintain their self-image as market infrastructure.
I’m sure Google and Income Securities Advisors Inc. will have more to say about the incident.
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