Nasdaq says over 10,000 trades have been cancelled

BOSTON, May 11 (BestGrowthStock) – In the wake of the stock
market’s May 6 chaos, more than 10,000 trades have been
cancelled, according to the Nasdaq OMX Group (NDAQ.O: ).

Exchanges including Nasdaq and NYSE Euronext’s (NYX.N: ) New
York Stock Exchange agreed to cancel “clearly erroneous” trades
after hundreds of stocks and exchange-traded funds lost as much
as 99 percent of their value and then fully recovered in a
20-minute period on Thursday.

Regulators are still struggling to understand what caused
the bizarre trading. [ID:nN1198250]

The Nasdaq “broke” 10,468 trades totaling 1.4 million
shares in 236 different securities, Executive Vice President
Eric Noll said on Tuesday in prepared testimony at a hearing of
the House Committee on Financial Services in Washington, D.C.
Noll did not give a dollar figure for the cancelled trades.

Only trades that occurred between 2:40 p.m. and 3 p.m. EST
(1840 GMT and 1900 GMT) at prices at least 60 percent above or
below a security’s price at 2:40 p.m. were cancelled, prompting
howls of protest from some investors.

Many complaining investors suffered considerable losses,
but below the 60 percent threshold, when the inexplicable
plunge triggered long-standing stop-loss sell orders. Others
who complained had winning trades unwound. They said they
should not be punished for stepping in to support the market
and help end the steep price slide.

The controversial 60 percent level for revoking trades was
set after “extended discussion” among exchange representatives
after the market close on May 6, Noll said.

“There was significant debate among the exchanges regarding
the proper break point for trades,” he said in his prepared
remarks.

According to one person on the call, Nasdaq officials
wanted even fewer trades cancelled — only those 80 percent
away from the 2:40 price — while other participants wanted the
revocation trigger set at 50 percent or less. Thus the 60
percent level was chosen as a compromise.

Larry Leibowitz, chief operating officer at NYSE Euronext,
said the cancellations had caused substantial confusion and
were “an unsatisfactory substitute” for market-wide circuit
breakers.

The U.S. Securities and Exchange Commission is reviewing
the exchanges’ policies for cancelling trades, Chairman Mary
Schapiro said in her testimony. The process must be “fair for
investors and consistently applied — both in the context of a
single event and across different events,” Schapiro said in her
prepared testimony for the committee.

ETFs were particularly hard hit by the chaos for reasons
that “are still unclear,” Schapiro said. More than 25 percent
of all such funds lost at least half their value. One ETF
sponsor told the SEC that 14 of its funds briefly traded for
less than 15 cents a share.

Stock Market Research

(Reporting by Aaron Pressman; additional reporting by Jonathan
Spicer; Editing by Leslie Gevirtz)

Nasdaq says over 10,000 trades have been cancelled