Washington Post Co. stock first to trigger SEC's new circuit breakers
Thursday, June 17, 2010; 12:03 AM
NEW YORK -- Erroneous trades briefly prompted shares of The Washington Post Co. to more than double in value Wednesday afternoon, triggering for the first time new circuit breakers put in place by the Securities and Exchange Commission after the "flash crash" that sent markets plunging last month.
A NYSE Euronext official said that trading in Post Co. stock was halted at 3:07 p.m. after three apparently erroneous trades went through NYSE Arca, an all-electronic trading platform. Two of the trades were for $919.18 per share, and another went through at $929.18 per share.
The company's shares had been trading at roughly $455 before the three transactions. Trading in Post Co. stock resumed five minutes later, at $453.25 a share.
It is still unclear exactly how the error occurred. NYSE Euronext officials say that millions of transactions take place daily and that a small fraction mistakenly take place at a price that neither the seller nor buyer intended.
Erroneous trades can be canceled by agreement between buyer and seller, or by the marketplace -- in this case, NYSE Arca. The three Post Co. trades have been canceled, said Ray Pellecchia, a spokesman for NYSE Euronext.
The SEC's trading curbs, implemented under a pilot program that will end Dec. 10, aim to prevent a repeat of the erratic trading that sent U.S. markets whipsawing May 6. During the flash crash, the Dow Jones industrial average slid nearly 1,000 points in a matter of minutes before recovering much of those losses.
The circuit breakers, which went into effect on the New York Stock Exchange on Friday, apply only to the Standard & Poor's 500-stock index. The curbs pause trading in a stock that falls or rises more than 10 percent in a five-minute span.
"It did what it was supposed to do, but it was triggered by an erroneous trade in this instance," Pellecchia said.
John Nester, an SEC spokesman, said the agency will be evaluating the pilot program.
A Post Co. spokeswoman declined to comment. The company's stock closed at$458.19, up 37 cents.