No Definitive Word on Potential Trading Error

The market opened as usual on Friday but there were still plenty of questions about exactly what happened during yesterday's swoon and if a trading error even occurred.
Publish date:

Updated with latest Citigroup statement, market's opening action.



) -- Trades that occurred in hundreds of stocks at the height of panicked selling on Thursday will be canceled but

Procter & Gamble

(PG) - Get Report

-- the stock at the center of speculation about a potential trading error -- was absent from the list.

Nasdaq OMX Group


, the operator of the Nasdaq Stock Market, released its list of stocks with canceled trades early Friday, while again stating it had no technology or system issues Thursday afternoon. "The NASDAQ Stock Market operated continuously and its close process ran successfully," the company said in a statement.

NYSE Euronext



is planning to cancel electronic trades

in the same time frame, Katrina Clay, an NYSE Euronext spokeswoman, has told



The Nasdaq's list features the tickers of

nearly 300 companies

but not shares of P&G,

whose brief but precipitous drop

was flagged by traders as a potential mistake.


, which was mentioned on Thursday as possibly being involved with whatever error may have occurred, took a tough stance after looking into the reports.

"As we have said, based on our review, rumors about a trading error by Citi are unfounded," a spokesperson told


in an e-mailed statement. "It is troubling that inaccurate and unfounded rumors were spread as far as they were."

P&G's stock abruptly fell more than 30% to below $40 from above $60 at around 2:45 PM ET, and the

Dow Jones Industrial Average

followed by falling more than 600 points in the next 15 minutes, before stabilizing and closing down roughly 350 points amid ongoing fears that Greek's debt crisis would spread to the rest of Europe and possibly trip up the nascent global economic recovery.

The trades being canceled are ones that reflect moves of 60% or more rom the last printed price on a particular issue that occurred between 2:40 PM and 3:00 PM ET on Thursday. P&G didn't experience that extreme of a drop but that's understandable, given the Dow component has a market capitalization of $175 billion and nearly 3 billion outstanding shares. Its momentary plus-30% fall seems harrowing enough. P&G shares closed down less than 3%, however, and a company spokesperson told


late Thursday that P&G believes the trade below $40 was an "aberration."

Futures were

looking higher early Friday

as the jobs report came in much stronger than expected but the market was down slightly in recent action, and there was still little clarity about what happened with P&G and the rest of the market during the most dramatic moments on Thursday.

Computer program trading was being widely discussed as a contributing factor in the market's swoon, but it was still unclear to what role such programs, which automatically trigger buy and sell orders when stocks and other trading instruments pass through predetermined levels, played in the action. Earlier Thursday, before the market tanked, the NYSE had issued a press release saying program trading accounted for 23.6% of its average daily volume during the week spanning from April 26-April 30, an average of 717.6 million program trades per day.

At its worst, the drop in the Dow wasn't quite enough to trip circuit breakers put in place by the New York Stock Exchange following intense drops in October 1987 and October 2009 that

halt trading

for various periods once the DJIA drops a certain amount. For the current second quarter, a decline of 1,050 points, or roughly 10% based on where the index was trading at the beginning of the quarter, would prompt a halt of an hour before 2:00 PM ET, 30 minutes between 2:00-2:30PM ET, and no halt at all after 2:30 PM ET.

A decline of 2,150 points, or 20%, in the DJIA would result in a market halt of two hours before 1:00PM ET, one hour if it occurs in the 1:00-2:00 PM ET timeframe, and if it happens after 2:00PM ET, the market would close.

The Securities and Exchange Commission

and the

Commodities Futures Trading Commission

issued a joint statement late Thursday saying they are investigating the situation.

"The SEC and CFTC are working closely with the other financial regulators, as well as the exchanges, to review the unusual trading activity that took place briefly this afternoon," the statement read. "We are also working with the exchanges to take appropriate steps to protect investors pursuant to market rules."

What recourse retail investors may have if a

trading error

occurred is also unclear at present. The Nasdaq's cancellation of so many trades is an acknowledgment that there was a problem during Thursday's session. The 60% differential, however, likely misses many trades that were the result of whatever error occurred, and retail investors with stop limit orders in place may very well have been unfairly pushed out of positions because of the unusual trading activity.


Written by Michael Baron in New York.