Bloomberg News

Bulltick ‘Erroneus’ Trades Voided by Mexico Bourse

April 16, 2012

Mexican stock exchange officials canceled a series of erroneous trades by Bulltick Capital Markets that set off a plunge in the nation’s benchmark index during the last trading session.

The IPC equities gauge sank 2 percent in about three minutes starting at 2:45 p.m. on April 13, before ending the day down 2.3 percent at 38,444.01, according to unadjusted prices provided at the time. The bourse has canceled the trades, which it said affected 13 companies in an e-mailed statement that day.

After voiding the trades, the IPC index closed down 0.6 percent at 39,136.99, the Bolsa said in a separate statement on April 14.

“It was a technological error very similar to the flash crash” in the U.S., Alejandro Creixell, a managing partner at Bulltick, said in a telephone interview from Mexico City on April 13.

The Dow Jones Industrial Average briefly lost almost 1,000 points in the so-called flash crash of May 2010, which spawned increased regulatory scrutiny for high-frequency traders, who use complex computer programs to make trade orders sometimes within milliseconds.

Bulltick executed more sell orders by volume than any other Mexican brokerage on the day. In the past month, it’s been the 19th most active seller, according to data compiled by Bloomberg.

“Due to the problem that said member generated, and upon its own request, the erroneous offers were canceled,” the exchange said on April 13, referring to Bulltick.

Modelo, Televisa

Arca Continental SAB (AC*), Mexico’s second-largest Coke bottler, sank as much as 14 percent in intraday trading. Grupo Aeroportuario del Pacifico SAB, the operator of airports in the Pacific and central regions of Mexico, fell as much as 10 percent.

Beer maker Grupo Modelo SAB (GMODELOC) and Grupo Televisa SAB (TLEVICPO), the world’s largest Spanish-language broadcaster, also retreated.

“All of a sudden the index started falling,” said Roberto Cavazos, who manages about 2 billion pesos ($152 million) in equities at Value Casa de Bolsa SA in Mexico City. “We started to look at different stocks and realized it was an error. There were very unusual trades from Bulltick -- big volumes and prices out of line with the market.”

To contact the reporters on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net; Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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