Shares of companies such as Nokia Oyj (NOK1V), MEMC Electronic Materials Inc. (WFR:US) and an exchange-traded fund tracking financial shares made unusual moves today, spurring concern about computerized trading errors.
U.S. shares of Nokia (NOK) jumped as much as 18 percent and fell more than 14 percent, while MEMC dropped as much as 20 percent. The Financial Select Sector SPDR Fund (XLF:US) jumped as much as 2.8 percent before erasing gains and trading lower. Other stocks making unusual moves between 10 a.m. and 11 a.m. New York time included Pandora Media Inc. (P:US), Hatteras Financial Corp. (HTS:US) and Las Vegas Sands Corp. (LVS)
“These wild, computer-driven market swings just add to the view that the market is somehow rigged,”Edward Bozaan, a managing partner at New York-based Cleargate Capital LLC, said in an interview. “I do not believe markets are rigged, but it’s understandable how these mishaps can reduce confidence in the markets. The world does not need another flash crash.”
The stock swings are the latest incident to fuel scrutiny of the electronic infrastructure of U.S. markets. Last week erroneous trades sent Kraft Foods Group Inc. up as much as 29 percent in the first minute of trading before they were canceled by exchanges. Regulators are studying ways to prevent electronic mishaps after a programming error almost sent Knight Capital Group Inc. into bankruptcy in August.
Nokia American depositary receipts reached $3.17 with one trade at 10:28 a.m. in New York, and then tumbled to $2.30 within the next five minutes, according to data compiled by Bloomberg. The Espoo, Finland-based mobile-phone maker was at $2.70 at 12:20 p.m., for a 0.6 percent gain for the day.
“Traders have to be extremely careful and put limits in when trading electronically,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said in an e-mail. His firm oversees about $80 billion. “Otherwise you are exposing yourself to risk.”
MEMC (WFR), the second-largest U.S. polysilicon maker, reached $1.98 and $1.99 a share within the six minutes after 10:52 a.m. before rebounding to $2.40. The Financial Select Sector SPDR Fund traded at $16.49 and $16.45 in two trades totaling about 600 shares at 10:47 a.m. and 10:53 a.m. before retreating to $15.97.
“Since there are many stocks this time, it might be a fat finger program,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston, wrote in an e-mail.
Richard Adamonis, a spokesman for NYSE Euronext, declined to comment. Robert Madden, a spokesman for Nasdaq OMX Group Inc., didn’t immediately respond to a phone call and an e-mail seeking comment.
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