ftse close

[darth trader]

LONDON (AFX) - A sudden fall in the FTSE 100 during the last minutes of
trading was caused by a tracker fund selling a broad range of stocks to account
for a reweighting in Shire Pharmaceuticals Group PLC, dealers reported.
Shire Pharma is reweighted tonight to account for 0.4 pct of the FTSE 100
index after its merger with Canada's Biochem, having previously been 0.2 pct.
This meant at least one tracker fund had to rearrange its portfolio,
resulting in the apparent heavy selling in the last seconds of today's trade,
dealers said.
The blue-chip index closed down 206.3 points to 5,690.5, having traded at
around 79 points lower ahead of its final 10-minute auction period where
remaining buyers and sellers are matched.
However, the weakness was seen as solely a technical one, as trading on the
FTSE futures market instantly recovered to predict a corrective spike when
trading restarts tomorrow.
A spokesman for the London Stock Exchange said all trades during the auction
period were valid, with no one stock falling by more than 4.5 pct.
bge/shw

 

[darth trader]

05/14 18:33
FT-SE 100's Late Drop Caused by Programs, Traders Say (Update1)
By Dan Weeks


London, May 14 (Bloomberg) -- The FT-SE 100 Index plunged in the last minute of London trading as computer-guided sell orders wiped out 31.5 billion pounds ($44 billion) of market value from stocks in the U.K. benchmark.

At the end of the session, the FT-SE 100 slid from about 5825 points to its close of 5690.5, down 206.3, or 3.5 percent. It was the biggest decline for the index since March 22.

``There was heavy selling across the board, and part of that was a large basket sell order,'' said a spokesman at the London Stock Exchange. ``We don't expect any trades to be canceled.'' He declined to name the firms involved in the trades.

The drop left 88 FT-SE 100 shares lower, while nine advanced and four were unchanged. Vodafone Group Plc closed 6.4 percent lower, HSBC Holdings Plc slid 5.8 percent and Marconi Plc lost 5.5 percent. Ten companies accounted for 69 percent of the slide.

``It looks like a program trade,'' said Peter Cogliatti, an equity trader at Williams de Broe in London. ``There was a lot of heavy selling at the close, with some very big offers of stock.''

Index futures rebounded from the loss. The June contract closed at 5835.5, down 80.5. That's 129.5 points, or 2.3 percent, above its fair value, according to Bloomberg data, indicating the FT-SE 100 index may open higher tomorrow.

In total, ``48.4 billion pounds was wiped off the stock market today,'' said Helen Humphreys of FTSE International Ltd., which compiles the FT-SE indexes. ``In the closing auction, the FT- SE 100 Index dropped 134 points. That wiped off 31.5 billion pounds.''

 

[ChartMan]

So does that mean there will be some "cheap stock" around in the morning, or are the MM's gonna fleece everyone?

 

[titus-uk]

Mmmmm....I wonder.....

Actually this, plus a disappointment from the FEd may make the MM's a lot of loot....no manipulation going on there then!!!

Mark

 

[Riz]

I won't be surprised if they mark up ftse and some ftse stocks first thing in the morning...apparently IG is predicting 5813 for the ftse opening... if correct it means +122.5...how about this for manipulation if not swindle....

Riz

 

[darth trader]

 The London stock market's blue-chip
index plunged minutes before the
trading ended for the day, apparently
because of an extra zero mistakenly
entered into a sell order.
Traders attributed the fall to a
mistaken trade by the brokerage unit of
Lehman Brothers. They said that the US
investment banking firm had meant to
execute a #30m sell order on a group of
stocks but instead executed a trade for
#300m.
"It's going to be bloodbath in the
morning (on Tuesday) when they have to
go in and cover this thing," said a
trader at a big US fund manager, who
added that the error could cost Lehman
millions of pounds.
Lehman declined to comment.
The mysterious trade helped send the
benchmark Financial Times-Stock
Exchange 100 stock index down 3.5%, or
206.30 points, to close at 5690.50,
easily outpacing moves in other
European markets. In Frankfurt, the
Xetra DAX fell 1.2%; in Paris, the
CAC-40 slid 1.4%; and in Milan, the
Mibtel rose 0.5%.
A London Stock Exchange spokesman said
the LSE doesn't expect to cancel any
trades or to restate the official FTSE
close. Officials believe that a large
trade in a group of major stocks
exacerbated heavy selling pressure, he
said. They don't believe it was a case
of market manipulation.
A spokesman for the Financial Services
Authority said the UK regulator was
aware of the trade and was awaiting a
report from the LSE.
Traders described the events as
harrowing.
"There was a wave of selling; it all
came in at once at the close," said a
European equity strategist at big
London firm. "People were going crazy
trying to figure out where it came
from." He said that in the three to
five minutes or so before the close,
the FTSE-100 index tumbled to its
5690.5 closing level from about 5825,
or about 2.3%.
Others speculated that the trade was a
programme trade that involved Vodafone
Group, one of the biggest stocks in the
FTSE-100 index. One reason that traders
were having a difficult time
identifying the culprit is the
introduction of a central counterparty,
or CCP, several weeks ago. A CCP is
designed to reduce risk by acting as
the trading partner of all buyers and
sellers. One side effect is that it
creates anonymous trading.
"We thought at first it might have
been a mistake," said Belinda Gerard, a
spokeswoman for FTSE International,
which compiles the FTSE indexes.
Officials later determined that an
actual sale of stock was the cause,
Gerard said.
Trading errors are not uncommon in
electronic markets. Only on rare
occasions have exchanges canceled the
trades. In 1998, a trader at what was
then Salomon Brothers rested his arm on
his computer keyboard, accidentally
sending orders to sell 14,500 futures
contracts on 10-year French government
bonds valued at 7.3 billion French
government bonds valued at 7.3 billion
French francs. The French futures
exchange refused to cancel the trade.
Several mistakes made on Eurex, the
Swiss-German derivatives market, have
become public, including a couple last
year.