Cramer writes abt the COCO 'do over.' Traders Won't Forget Nasdaq's 'Do Over' http://www.thestreet.com/p/rmoney/jamesjcramer/10130639.html "I still can't believe this happened, and until we get a minute-by-minute analysis of who did what when, this issue is going to stay top-of-mind for everyone who hopes this is the Nasdaq's chance to take business from the NYSE." "I don't think the Nasdaq understands that this do-over isn't going away until it fesses up about what really happened here. I don't think anyone will want to do serious business with Archipelago again unless it finds a way to assure that it's a real business the Nasdaq must take seriously."
Could not agree more - some points to consider: 1. Protecting the Franchise Increasing intervention by regulatory bodies such as Nasdaq to protect their own (e.g., rescue idiots who can't type) is the latest craze to poison the trader's well. Suppose you were short during the next crash. Are you sure your deep out-of-the-money puts won't be busted? Is the next crash going to be triggered by the mother of all electronic errors? I believe it will be. 2. Penny for your Shares? Remember the good old days of 1000 shares on each side back in the mid 90's? Most stocks have thinned out completely. Look at spring of 2000 for reference, the depth and velocity of the decline - it's even worse now. The next one will be shocking. SOES and pennies ruined capital commitment. 3. Do the Fraud Wave We're in the middle of it right now. Don't worry - much more yet to come, they're eating their own right now. These things tend to ping at the investing collective, and then the torpedo arrives, triggering the "crisis" when everyone realizes it's all just paper anyways. Regards, PTR
Getting buggered on a trading halt is nothing new. It's been going on for years. I don't mess with stocks that are going crazy. So I don't make the 'easy' money when it's there, and I don't suffer the pain when it's there. Though I sympathise with traders that got hosed, it's a bit disingenuous to claim ignorance of the potential for what happened. For those that sold on ARCA during the NAZ halt, if real news had come out and the stock fell another 10 points, would they be crying foul? Extraordinary gains come with Extraordinary risk.
"For those that sold on ARCA during the NAZ halt, if real news had come out and the stock fell another 10 points, would they be crying foul? Extraordinary gains come with Extraordinary risk." There was no "real news". That fact was established before the Nasdaq halt. Fortune favors the bold. Unfortunately, we were trading a corrupt market that shits on the private investor.
the exchanges have no choice but to break the trades of big mistakes like this. if a firm sells 2 million shares that they dont have by mistake many say they should just eat it. in most cases it isn't possible. the firm may not be able to deliver that stock either because they cant buy it or because they don't have the money to correct the situation. in a case like that those trades wont clear. that means that any stock you bought you wont receive. that means if you sold the stock to someone else you wont be able to deliver it and on down the line. the exchanges have no choice but to make sure the stock can be delivered or to bust the trades. the fact that they didn't bust the trades while the stock was halted is inexcusable. the nyse would never have done that. they halt it until the problem is corrected and do a good job of making it as right as possible.
I don't agree. The firm making the mistake needs to buy back the shares it sold by mistake and if that means bankrupting the firm, then so be it. If, after that, the mistake isn't fully covered then the clearing member is next in line to eat the remaining loss......and so on down the line until it gets to the exchange who must stand behind the trades.
that sounds good but isn't practical. if the firm cant make the trades good and files bk and the clearing firm sues the company for the money it could all take months or years to work out. the stock has to be delivered in 3 days to keep the chain of ownership intact. i know that to short term traders it feels like we are just trading symbols but every trade we make we take ownership in a company even if for a split second and we guarantee that we will deliver those shares within 3 days.
You must subscribe to one of those expensive news services. The ones that guarantee there is no news.
Bloomberg, Dow Jones, Reuters, and TTN all said that COCO's CEO had issued a statement that the company had no news and any rumors were false. BTW--- Bloomberg just reported that NASDAQ is being sued over the COCO debacle.
Totally agree. Any trader who wants to play the game of jumping on big gappers or stocks moving hard on news, has to take the consequences. And that OFTEN includes market inefficiences. COCO is on my daily tracking list, and I saw the move as it happened. But despite my itch to get in, from long experience I knew that it was a dangerous play, especially after what had just happened with CECO the day before. If you are going to play in that sandbox, don't complain if you get dirty.