"Amazingly, as stocks were diving downward, willing buyers were locked out of purchasing"
This is Just Plain Wrong. The post offers no evidence for this. For my evidence I'll use the fact that trades were occurring at almost all price levels, which is why some had to be canceled. For the stocks that "went to 0", that in fact means there were no willing buyers for anything other than $.01 (I doubt any trades actually occurred at 0)
"There has to be some explanation, and I can't imagine why it would take days, or even hours to figure out how a $50 stock could get to a price of $0 with no one able to purchase as that price is dropping"
Yes, the answer is that when a deal looks too good to be true, you check it out for at least another second (or perhaps 10 minutes, the duration of the "flash crash") before you put millions to billions of dollars of money into something. Again, I reject the idea that no one was able to purchase at any point.
I think what he is referring to is that ARCA (NYSE's sucky exchange) stopped routing buy orders in an effort to boost prices locally. So if you placed a buy order on ARCA, and it could be filled on BATS, it was not routed to BATS and remained unfilled (this is what normally occurrs).
I think you're referring to the following quote :
"As part of that process, the NYSE held on to "buy" orders, in the hopes that it could gather enough of them to meet the selling demand. "Sell" orders that came to the NYSE were rerouted to other exchanges, which were not required to slow trading. Those other exchanges were soon overflowing with sell orders and didn't have enough buy orders to meet them, leading to the rapid decline in prices."
I've spoken to a recently retired HF trader about it to verify that it seems wrong and he says that the way that quote is written it doesn't make sense.
Comments
"Amazingly, as stocks were diving downward, willing buyers were locked out of purchasing"
This is Just Plain Wrong. The post offers no evidence for this. For my evidence I'll use the fact that trades were occurring at almost all price levels, which is why some had to be canceled. For the stocks that "went to 0", that in fact means there were no willing buyers for anything other than $.01 (I doubt any trades actually occurred at 0)
"There has to be some explanation, and I can't imagine why it would take days, or even hours to figure out how a $50 stock could get to a price of $0 with no one able to purchase as that price is dropping"
Yes, the answer is that when a deal looks too good to be true, you check it out for at least another second (or perhaps 10 minutes, the duration of the "flash crash") before you put millions to billions of dollars of money into something. Again, I reject the idea that no one was able to purchase at any point.
I think what he is referring to is that ARCA (NYSE's sucky exchange) stopped routing buy orders in an effort to boost prices locally. So if you placed a buy order on ARCA, and it could be filled on BATS, it was not routed to BATS and remained unfilled (this is what normally occurrs).
http://www.washingtonpost.com/wp-dyn/content/article/2010/05...
I think you're referring to the following quote : "As part of that process, the NYSE held on to "buy" orders, in the hopes that it could gather enough of them to meet the selling demand. "Sell" orders that came to the NYSE were rerouted to other exchanges, which were not required to slow trading. Those other exchanges were soon overflowing with sell orders and didn't have enough buy orders to meet them, leading to the rapid decline in prices."
I've spoken to a recently retired HF trader about it to verify that it seems wrong and he says that the way that quote is written it doesn't make sense.