It's a great story for late-night monologues, but this business about how a trader mistakenly entered an order for $16 billion instead of $16 million has been pretty much ruled out, reports the NYT. Not a huge surprise, according to Bill King of the King Report. As he tells Alan Abelson at Barron's:
"What order entry system uses 'b' to designate billion and 'm' to designate million?" And he promptly answers his own rhetorical question with an unequivocal "None!" Bill also points out that if an error had occurred, it would be known quickly and would take only minutes to finger the culprit. However, he explains, it's better for Wall Street and regulators to blame a hapless trader for what happened last Thursday "than address the nefariousness of high-frequency trading, direct-exchange-connected computers" and the like.
Still being looked at, reports the WSJ, is whether a single large trade in Procter & Gamble was picked up by computer trading systems, accelerating the market-wide declines.
The violent fall has prompted an examination of the limitations of existing market "circuit breakers" and exposed weaknesses brought about by the changes in the character of modern stock markets, where most trading takes place at high speed between computers, rather than directly between human brokers. At a minimum, traders said, the selloff shows that regulatory oversight of stock trading has not kept up with the changing nature of trading.