Apple Has Mini Flash Crash On BATS

A trader on the floor of a different exchange, the NYSE, looks worried

Call it a very bad day for flash traders.

On the very day that BATS, short for Better Alternative Trading System, one of the larger high-frequency trading exchanges in the country, launched its IPO, an errant trade on the BATS exchange caused a mini flash crash in the most valuable stock in America.

At the same time, adding insult to injury, technical glitches led to problems with BATS's own brand-new stock, causing trading in those shares to stop.

There is no evidence that any of these glitches were the result of high-frequency, or flash, trading. But this has been an embarrassing day for a key player in the high-frequency trading industry.

In the course of about five minutes, shares in Apple tanked by 9.4 percent. With a market value of more than $556 billion, Apple is the biggest U.S. public company, and its shares dominate the Nasdaq Composite index and help drive the S&P 500-stock index.

Apple shares have since recovered to their pre-crash level, though the nosedive triggered a momentary halt in trading at the BATS exchange.

In a series of alerts posted to the exchange website this morning, BATS said that it was having "system issues" in trading of companies with stock exchange ticker symbols in the A through BF range -- a category that includes Apple, ticker symbol APPL, and the exchange's own brand-new ticker symbol, BATS. About an hour later, BATS reported that the issues had been resolved. But then it halted trading in that same symbol range again for about ten minutes an hour after that.

The company's IPO priced at $16 a share, at the bottom of their expected price range, the Financial Times reported, and fell as low as $15.25 before trading was halted. At one point, the stock appeared to fall to less than a penny per share because of a technical problem. According to an alert posted to the BATS website this afternoon, the situation got so crazed that the exchange has permanently halted trading of its own stock on the BATS exchange and cancelled all trades of its stock from earlier in the day.

The unfortunate start to BATS's public offering today comes just as The Wall Street Journal reports that the SEC announced a new probe into high frequency trading, a principal activity on that exchange. In particular, the probe will be looking into whether high frequency traders used their close relationships with computerized stock exchanges like BATS to gain an unfair advantage in the stock market, according to the Journal.

Comments

[rudy in la]

02:48 PM on 03/27/2012

I still think all of these flash crashes over the past couple of years are tests run by brokerages to see if their "scorched earth" trading programs work properly. Far fetched? Hardly. Never underestimate greed. Maybe they didn't mean to go "live" with these programs, but Ihave a feeling they did. Conspiritorial? Sure. Doesn't make it impossible.

[Tmiley]

10:13 PM on 03/25/2012

I worry about computers being in control of the Stock Market, but that is the truth of the matter. The idiots on Wall Street have given full control over to supercomputers, all in the name of making faster stock deals and making more money. There has already been trouble with these networks. With the control given to supercomputers, there is nothing to stop a major glitch in the system and the market could lose over a thousand points in one minute. I can recall that this has happened twice already, but was not that severe. Large corporations use technology to raise the bottom line of profit, no matter if it is dangerous or not. When money is the most important thing in America, stupid people will do anything to make more of it.

[Drosco]

01:15 PM on 03/25/2012

Wow if you are going to report on a company alteast get the stock symbol right. Wow.

[stumptownliberal]

12:28 PM on 03/25/2012

Apple's ticker symbol is AAPL not APPL as incorrectly reported in this article.

[jsgaetano]

05:29 PM on 03/24/2012

Industry Self-Regulation: ALWAYS a miserable failure.

[Honest Babe]

12:04 PM on 03/24/2012

All this means is that at any point in time, stocks may be overpriced. "Value" is not the company but what the market says it is this minute. OOOOOh we're excited that the company has a new product and we might make money on our paper investment. OOOOOh we heard there are problems with that new product, sell sell. Overall, Apple is still a good investment over the long term.

[jflorish]

10:37 AM on 03/24/2012

I'm curious to know how they IPO'd on this day and never had the problem on a previous day, they have been doing this for 7 years. Unless by being public they process different in how they handle stocks.

[guveqzero]

10:22 AM on 03/24/2012

This is price manipulation and computer fraud. Two or more computers, working together, forcing price changes to skim off money under the direction of some criminal is still illegal. The fact that robots are doing the job doesn't make a difference. Those that gain from the operation are presumed to be in the know, thus guilty.

[rufusxfirefly]

09:55 AM on 03/24/2012

The Chinese had to be involved.

[Maschine]

05:11 AM on 03/24/2012

This needs to be banned

[waldopepper]

03:59 AM on 03/24/2012

Consider the following "...shares in Apple tanked by 9.4 percent." And then later in the day.
"Apple shares have since recovered to their pre-crash level"

So if some bought Apple when it was low, they would profit handsomely. Now imagine if you will a person who was clever enough to engineer this 'glitch' for personal gain. I think they should examine the sales records and look for those who bought large amounts of Apple when it was down. At the very least this event should be examined as a potential rehearsal for the day when someone does this as a genuine attempt to profit from a mere (engineered) glitch.

[markin2500]

01:52 AM on 03/24/2012

Scary how delicate the market really is, Yes?

[Maschine]

05:12 AM on 03/24/2012

No, scary how the markets are allowed to be manipulated

[Winski]

10:50 PM on 03/23/2012

So, were the trades that happened during BATS screw ups, voided? If not, then the markets are right back to the place the markets were in 2007-2008... All lies-all the time.... So this just validates that their are no investors left... Just traders and math guys...

Against this force, the retail investor has no chance... Get out... Get out now.. Put you money somewhere else..

[Maschine]

05:14 AM on 03/24/2012

Agree, goldman hires the best math guys to tinker with algorithms

Only chance retail investors have is to act together as one trading block which has the power to change how the markets are manipulated

Yoo bad OWS doesn,t seem to understand that our real weapon is money and not tents in parks

[salkoc]

08:42 PM on 03/23/2012

posted this to the networks .....why did the so called glitch happen in aapl stock and no others. this story does not hold water ...the stock dropped 50 dollars in a minute with no bids ?

for the record it happened earlier this week but was never mentioned .stock went from 605 to 570. something is wrong.

[JohnTheMac]

08:28 PM on 03/23/2012

I know why BATTS got beat up!
He told Tommy to "Go home and get your shine box!"
http://www.youtube.com/watch?v=2oP1NMB_I0s

[HRHuffinpuffy]

01:13 PM on 03/24/2012

You're a funny guy!