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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (37790)	2/21/2011 3:04:29 PM
From: Maurice Winn	2 Recommendations Respond to of 46821

Flash Crash amplitude and time. Buy orders for shares permitted, provided the price offered is at the government set level or above. siliconinvestor.com <...The circuit breakers pause trading across the U.S. markets in a security for five minutes if that security has experienced a 10% price change over the preceding five minutes. On June 10, the SEC approved the application of the circuit breakers to securities included in the S&P 500 Index, and on September 10, the SEC approved an expansion of the program to securities included in the Russell 1000 Index and certain ETFs. The circuit breaker program is in effect on a pilot basis through December 10, 2010. A further observation from May 6 is that market participants’ uncertainty about when trades will be broken can affect their trading strategies and willingness to provide liquidity. In fact, in our interviews many participants expressed concern that, on May 6, the exchanges and FINRA only broke trades that were more than 60% away from the applicable reference price, and did so using a process that was not transparent. To provide market participants more certainty as to which trades will be broken and allow them to better manage their risks, the SEC staff worked with the exchanges and FINRA to clarify the process for breaking erroneous trades using more objective standards.13 On September 10, the SEC approved the new trade break procedures, which like the circuit breaker program, is in effect on a pilot basis through December 10, 2010. > What has replaced the trial since 10 December 2010? That looks like more advantage for the Flash Crashers because they can build into their computers those tricky rules and the dueling computers can race prices down and up, using those rules to enhance their profitability at the expense of those who don't know the rules, or move too slowly to take advantage of them. So I'm still not in a position to provide liquidity by leaving buy orders sitting in the market ready to pounce on any computers daring to enter my territory with ridiculous sell orders. But at least it occurred to the authorities that people don't like having their trades canceled, so they will refrain from providing liquidity by way of buy orders. So far, the official response to the Flash Crash challenge is to ban sellers from selling and to threaten buyers with cancelation of trades. That will induce panic in the former and withdrawal from the market of the latter. That, unsurprisingly, will INCREASE the amplitude of the next flash crash and because of the time restraints, will extend it over a longer period, which will enable more people to have the time to enter panic mode, thereby making the crash that much greater. With the previous Flash Crash, it was all over before people who had gone to the toilet could get back to put in some sell orders, and there were buy orders in sufficient quantity to hold the line, though those buyers were robbed afterwards with canceled trades. Next time they will NOT be so silly as to put in buy orders or leave them lying around. Mqurice