Yes, the problem was computerized program trades

05/06/2010 11:04 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

This from Bloomberg tonight (May 6):

"Computerized trades sent to electronic networks turned an orderly decline into a rout, according to Larry Leibowitz, the chief operating officer of NYSE Euronext. While the first half of the Dow’s plunge probably reflected normal trading, the selloff snowballed because of orders sent to venues with no investors willing to match them, Leibowitz said in an interview on Bloomberg Television. "

“If you look at the charts you can see fairly clearly where the trades came in,” he said from New York. “It’s that V-shaped drop where it came down and snapped right back up. You had some very high-cap stocks trading down 50 percent or large percentages in a split instant because there really was no liquidity in electronic markets.”

"The SEC (Securities & Exchange Commission) and Commodity Futures Trading Commission said in a statement that they were “working closely” with regulators and exchanges to study the “unusual trading activity.”

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