[Infowarrior] - Cisco Halt Exposes Flaw as NYSE Amex Handles Nasdaq Trading

[Richard Forno]

Cisco Halt Exposes Flaw as NYSE Amex Handles Nasdaq Trading

July 30, 2010, 12:11 AM EDT
By Nina Mehta

July 30 (Bloomberg) -- The five-minute halt in Cisco Systems Inc. yesterday highlighted a flaw in how NYSE Amex executes orders it can’t fill on its book at the best price.

Cisco stopped trading for five minutes following a 100- share execution on Amex for $26 at 10:41:33 a.m. New York time that drove the shares up more than 10 percent, triggering a circuit breaker implemented after the May 6 market crash. Amex began trading Cisco on July 27 as part of an expansion to companies listed on the Nasdaq Stock Market.

The circuit breaker was triggered after an order Amex received traded against the available shares at the best-priced offer on that market and elsewhere, said Ray Pellecchia, a spokesman for NYSE Euronext, which owns Amex. The order, which wasn’t completely filled, then traded against available offers on Amex, he said. An execution at $26 triggered the circuit breaker even as other venues traded at less than $23.50.

“We’re stopping trading in incomparably liquid products because of dumb mistakes,” said Jamie Selway, managing director at broker White Cap Trading LLC in New York. “Amex has a thin book in Cisco and doesn’t have a robust routing system for orders. Amex should consider a smart-routing solution and not do the minimum Reg NMS routing. Doing the minimum is a profoundly bad idea.”

< - >

http://www.businessweek.com/news/2010-07-30/cisco-halt-exposes-flaw-as-nyse-amex-handles-nasdaq-trading.html