Mexican investors rushed to adjust their portfolios before an index rebalancing today sparked a surge in orders that overwhelmed the exchange’s operating system and forced it to halt trading.
The IPC index fell 0.5 percent to 37,872.95 yesterday before the stoppage as trading volume surged 305 percent to 912 million shares, the most since Aug. 31. Bourse operator Bolsa Mexicana de Valores SAB (BOLSAA:US) cut off transactions at 2:48 p.m. local time, or 12 minutes before the normal close, and trading never resumed. The exchange said trading will reinitiate today as usual.
The overloading of the system adds urgency to the exchange’s plans to implement a faster trading engine it’s been planning to put in place by the end of June. It follows a series of late-day transactions by Bulltick Capital Markets on April 13 that the chief regulator said may have been the nation’s worst trading mistake, spurring pledges by officials for stepped-up efforts to ensure an orderly market.
The exchange’s operations slowed yesterday because of a “saturation in the number of orders per second,” Jorge Alegria, the head of markets and information at the stock exchange, said yesterday in an interview in Cancun, Mexico. “Exchanges are subject to these kind of glitches.”
Facebook Inc. had its first day of trading disrupted by the “poor design” of Nasdaq OMX Group Inc.’s software for IPO auctions, Robert Greifeld, the chief executive officer of the exchange operator, said on May 20.
“The situation will not be present with the new trading engine,” Alegria said. “That’s exactly why the new trading engine has been developed -- to have 200 times more capacity than the one we currently have.”
The exchange processed 145,000 trades on the day, more than twice the daily average for 2012, according to data provided by the bourse. It received 1.2 million orders.
Volume of America Movil SAB (AMXL), the phone company controlled by billionaire Carlos Slim, and Wal-Mart de Mexico SAB was more than six times the average for the past three months, according to data compiled by Bloomberg.
In the 10 minutes before the halt, shares of Wal-Mart de Mexico, the second-largest company on the IPC by weighting, fell about 2.1 percent, extending the day’s losses to 5.1 percent. The shares closed at 34.67 pesos.
Bancomer Casa de Bolsa, the local brokerage unit of Banco Bilbao Vizcaya Argentaria SA, operated more shares of IPC stocks than any other brokerage today with 418 million shares, data compiled by Bloomberg show. Bancomer’s brokerage has been the seventh biggest in Mexico by gross volume this year.
America Movil’s weight on the index will decline to 24.9 percent from 27.3 percent as part of the rebalancing, according to the exchange. Wal-Mart de Mexico’s weight will fall to 11.6 percent from 11.7 percent, Bolsa Mexicana said.
The so-called administrative recesses are activated occasionally by Mexico’s exchange and are usually linked to software glitches.
To contact the reporters on this story: Jonathan J. Levin in Mexico City at firstname.lastname@example.org; Carlos Manuel Rodriguez in Mexico City at email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org