Northern, WI  10/6/2012 (BasicsMedia)  — India’s Stock Exchange has Flash Crash Meltdown and US Equity Markets are not the only worldwide exchange coining the phrase “Flash Crash “.  The Indian National Stock Exchange, India’s 2nd largest exchange behind the Bombay,  said that 59 mistaken orders valued at 6.5 billion rupees ($125 million) were placed by brokerage Emkay Global Financial Services on behalf of an institutional client.

 

Little information about the specifics of the trrade itself, but this looks very similar to other execution breakdowns in exchanges around the world.  These execution errors are technology driven whereas someone with their finger on the trigger enters information in correctly (pilot error) and rade goes on seek and execute.  In this case it activated circut breakers on the exchange itself.  The largest exchange in India had no parallel drop so this was easy to spot.
Trading resumed after a ten-minute halt, the exchange said, and has been functioning normally since then. Shortly after midday, the Nifty was down 0.66 percent at 5,749 points.  Trading on India’s second-biggest stock exchange was halted briefly this morning after “abnormal orders” worth 125 million dollars from a local brokerage firm crashed the main index.

 

This is erily similar to a Flash Crash which occurred in US Markets  few years ago and roiled everyone associated with trading and execution.  Also recent bailouts of Knight Capital were needed post flash crash in order exection in individual stocks caught regulators eyes and brings obvious questions about liquidity.  It becomes a larger question now that the flash crash scenario is part of the trading platform versus and indiviual pilot error.  Little has been reported this moring but we will keep you up as the story develops.

The National Stock Exchange said the Nifty index fell 920 points or 15.5 percent after trades in the shares of undisclosed companies, a decline that breached the level which triggers an automatic shutdown.”The Nifty fall was on account of abnormal orders resulting in multiple trades at low prices,” a statement from the exchange said. “The circuit filter got triggered and the market closed automatically.”

 

Questions will be part of the Financial media cycle today as details are sorted out in Bombay

 Disclaimer:  We have no position in any stock in India or related to this article.
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