March 24, 2012

Stock Exchange Trades Its Own Shares, Plunges Into the Abyss

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BATS, based in Kansas City, is the third-largest stock exchange in the country. This morning they went public, offering shares in BATS to the public for the first time. Naturally, shares in BATS were traded on BATS itself.

So what happened? At 10:45 AM trading opened and was halted immediately because of a software glitch. At 11:14:18 trading resumed. At 11:14:19:850 — that is, less than two seconds later — the stock had crashed to one-hundredth of a cent. That is not a typo. Via Zero Hedge, here’s a chart showing the first two seconds of trading:

From the Wall Street Journal’s report:

The day’s events may rekindle questions about the reliability of the stock-market’s plumbing, questions that came into sharp focus almost two years ago when the broader market plunged hundreds of points within minutes in what came to be known as the “flash crash.”

….BATS, which stands for Better Alternative Trading System, was launched in 2005 by Dave Cummings, a pioneer in high-frequency trading, to compete with more traditional markets such as the NYSE and Nasdaq. It was designed for speed and gained favor with sophisticated trading firms, in part because it rarely had technical glitches.

Take your pick: (a) This is just a software glitch. It could happen to anyone. (b) This is what happens when the financial market is controlled by computer algorithms, not human beings. It may be “just a glitch,” but it’s a telling one. Next time it could end up being more than just an embarrassing moment.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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