DirectEdge to provide pricing problem fix


Market structure has been a huge issue.

At times, it seems like the vast, interconnected, technology driven market for stocks is becoming unhinged, lapsing into a Wild West environment where the rules mean progressively less. I make this point after news that yet another exchange has had pricing problems.

Securities Technology Monitor reported that Direct Edge, which operates EDGA and EDGX, "disclosed in a Dec. 28 trading notice and a Jan. 11 update that it had discovered two separate discrepancies that may have led to poor pricing for some customers. The company said it fixed one of its computational problems in time for trading January 14. The other won't be fixed until 'on or about February 15.'"

It also noted that, "The discrepancies were in how orders were being prioritized on its two platforms and were in violation of Direct Edge's own order priority rules, the exchange said. Not disclosed is how or when the discrepancies came to light or how many trades were affected in each case. Also not known is how much money might have been lost by customers due to these discrepancies."

The disclosure comes after news that BATS consummated hundreds of thousands of trades over four years at the wrong prices. Indeed, the fact that 430,000 transactions could occur away from the NBBO undetected speaks to some huge market-wide issues.

For more:
- here's the article

Related articles:
Exchanges seek private solutions to glitch problems
SEC cracking down on exchange companies

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