Stock market major volitility - forced liquidation of major hedge likely

[America2]

Down 352 now, PPT is working in full swing!

At the end of the day, it will be in green(barely), but the MSM will say, "Whew! We dodged a bullet! Wall Street saved the day!" - you heard it here first.

[rawiron1]

All the financial Web site servers are crashing.  I can't get on Bloomberg.

Jason

[ImmortalTRUTH]

Indexes Down 3 Percent After Plunging

http://www.nytimes.com/reuters/2010/05/06/news/news-us-markets-stocks.html?ref=reuters

NEW YORK (Reuters) - U.S. stocks were down more than 3 percent on Thursday afternoon after briefly nosediving, with the Nasdaq at one point down more than 9 percent and the S&P 500 and Dow briefly falling into negative territory for the year, as worries about contagion from Greece's debt problems mounted.

Investors were disappointed the European Central Bank did not take fresh measures to help stem the Greek debt crisis. The ECB did not discuss the outright purchase of European sovereign debt as some had hoped for, but gave verbal support instead to Greece's savings plan. The ECB left interest rates at a record low.

"Right now you just have a panic sell. It could be a long-term negative for stock market because it could mean the long-term high is in place. It's very likely we've seen the highs for this cycle," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California.

The Dow Jones industrial average was down 340.47 points, or 3.13 percent, at 10,527.65. The Standard & Poor's 500 Index was down 35.89 points, or 3.08 percent, at 1,130.01. The Nasdaq Composite Index was down 65.34 points, or 2.72 percent, at 2,336.95.

[rawiron1]

Yuppies here at the office are freaking out.  I mean FREAKING out!  lol

Jason

[stangrof]

DOW JONES NEWSWIRES Even though the Dow Jones Industrial Average's brief 1,000-point tumble Thursday fell just short of a 10% decline from Wednesday's close, a 20% drop would have been needed to halt trading.
After 2:30 p.m. EDT, the 20% standard goes into effect. Before then, a 10% drop would have triggered at least a 30-minute halt. For the second quarter, 10% equals a 1,050-point drop in the Dow industrials while 20% equates to 2,150 points.
The exchange first implemented the circuit breakers in the wake of the market's crash in October 1997. In 1998, the New York Stock Exchange set the triggers at 10%, 20% and 30% declines in the Dow for three levels of halts.
Treasury prices soared as flight-to-safety flows intensify. The euro tumbled more on concerns about the stability of Greece and other markets in the region, while riskier assets from U.S. stocks, corporate bonds and other assets also fell sharply.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ldug4OAPVJn2zqIn0sR%2Bzg%3D%3D. You can use this link on the day this article is published and the following day.
http://www.easybourse.com/bourse/actualite/news/828662/stock-market-tumble-not-enough-to-trigger-nyse-circuit-breaker.html

[America2]

Yuppies here at the office are freaking out.  I mean FREAKING out!  lol

Jason

It's at under -300 now - they can chill out now. lol

[getch36]

They just said on CNBC this was all caused by a computer error at a major firm...........

[stangrof]

They just said on CNBC this was all caused by a computer error at a major firm...........

BBBBBBBBBBBBBB SSSSSSSSSSSSSSSSSSSSSSS

[Dig]

They just said on CNBC this was all caused by a computer error at a major firm...........

nle10 computer glitch?

[HAZMAT]

-284.09 (-2.61%) looks like they came in and manipulated the numbers again.

[Dig]

Yup, Richard Clarke to the rescue, 2007, the narrative is very old to justify major volatility, how would we know, there is no audit...


06 March 2007
A Glitch: NYSE Minor Malfunction...
http://operationalrisk.blogspot.com/2007/03/glitch-nyse-minor-malfunction.html

AS SHAREMARKETS plunged around the world, anxious investors, big and small, sat glued to their computer screens. But the lesson learned from yesterday's market correction was that computer systems just aren't up to scratch when investor panic sets in.

The first malfunction came in New York, where a glitch triggered a sudden plunge in the Dow Jones Industrial Average. Brokers, already spooked by morning falls, could do little but watch on as, at 2pm local time, the Dow fell 200 points in seconds.

Dow Jones said its computer system couldn't handle the vast volume of trades — about 4.5 billion, double the daily average — at the New York Stock Exchange.

If you have been reading Richard A. Clarke's new "Fiction" novel, Breakpoint, the so called "Glitch" had some of us wondering:
The global village--an intricately intertwined network of technology that binds together the world's economies, governments, and communication systems. So large, so vital--and so fragile. Now a sophisticated group is seeking to "disconnect the globe"--destroying computer grids, communications satellites, Internet cable centers, biotech firms. Hard to do? If only that were so.

What is a glitch anyway? Didn't we hear that as an excuse from Virgil Gus Grissom in the "The Right Stuff".? He was pilot of Mercury-Redstone 4 ("Liberty Bell 7"), the second American (suborbital) spaceflight. Following the splashdown of "Liberty Bell 7", the hatch, which had explosive bolts, blew off prematurely, letting water into the capsule and into Grissom's suit. Grissom nearly drowned but was rescued by helicopter, while the spacecraft sank in deep water. Grissom maintained he did nothing to set off the explosives to blow the hatch. "It was a glitch!" Later evidence proved him right.

Whenever you hear the word "Glitch", what are you thinking? Human error. Or Computer error.
n.
A minor malfunction, mishap, or technical problem; a snag: a computer glitch; a navigational glitch; a glitch in the negotiations.
A false or spurious electronic signal caused by a brief, unwanted surge of electric power.
Astronomy A sudden change in the period of rotation of a neutron star.
In the case of the New York Stock Exchange and Liberty Bell 7 we are talking about something that could not be predicted. Maybe not something that had ever been seen before during testing or simulations. Therefore, the only answer could be a glitch. If you are a computer programmer you know exactly what happened. You know where the orders were piling up in the database ready to be tabulated when the systems processes started up again. Being down for an hour with those kind of trading volumes can pile up a few orders in the queue.

Operational Risk Management is about anticipating those occasional "Glitches" and preparing for them in advance. While you may not see the exact variant everytime you create and exercise a scenario, you recognize something similar. You get a feeling that you have seen this before, even if it was in a bad dream. As a Quiet Professional, working to mitigate risks, create a safe haven and achieve your mission, you expect that you will see a glitch today. And if you do, then you will act with confidence and speed to remedy the situation as it unfolds before you.

So you want a look into the crystal ball? As Richard Clarke says, "Sometimes you can tell more truth through fiction." Or is it?

[endof]

they are trying TO COVER IT UP LIVE ON NEWS

wtf! behind it drops -1000 points and they just carry on babbling away about bs like everythings normal!

[Dig]

How a stray mouse click choked the NYSE & cost a bank $150K
http://arstechnica.com/business/news/2010/01/how-a-stray-mouse-click-choked-the-nyse-cost-a-bank-150k.ars
By Jon Stokes | Last updated January 27, 2010 8:51 PM

fat fin·ger |fat 'fi NG gər |, verb, to enter a trade order incorrectly into an electronic stock trading system: He fat-fingered that sell order by accidentally adding two zeroes.

The term comes from the idea of a clumsy, "fat-fingered" typist, who presses extra keys without being aware of it.

As the practice of high-frequency trading continues to become more widespread, concerns are growing that erroneous trades carried out by "algos gone wild"—a sort of digitally amplified version of the "fat finger" phenomenon—could cause a market crash at Internet speed, a meltdown that no one could stop. Two recent market glitches could provide a preview of what's to come.
Double-click of death: the Credit Suisse fiasco

Like Goldman, Sachs and other large banks, Credit Suisse has a proprietary trading desk—i.e., a division of the bank that trades stocks and derivatives in order to make money for the bank itself (instead of for the bank's customers). And, like other banks in its class, much of this proprietary trading is now done entirely by computers that execute trades by the millisecond based on tiny, fleeting fluctuations in a stock's price.

On November 14, 2007 at 3:20pm one of Credit Suisse's trading algorithms suddenly went haywire, and, in a few moments, sent hundreds of thousands of bogus requests to the exchange. This sudden surge of requests, which were cancellations for a large batch of orders that the machine had never actually sent out, acted like a denial-of-service attack on some parts of the New York Stock Exchange. The messages clogged the tubes and caused parts of the exchange to freeze up, affecting trading in 975 stocks.

After an extensive investigation, the NYSE assessed a $150,000 fine for Credit Suisse's "failing to adequately supervise the development, deployment and operation of a proprietary algorithm, including a failure to implement procedures to monitor certain modifications made to the algorithm."

The exchange's filing, released a little over a week ago, has the details of precisely what drove the algorithm haywire—it was a trader who accidentally double-clicked an icon in a trading program's interface, when he should've single-clicked. No, I am not making that up.
And you thought butterfly ballots were bad UI design

The algorithm that choked is part of a program called SmartWB, and it was designed to spit out a constant stream of trading orders all day long, using a set of fixed parameters. These orders would be transmitted to the NYSE, where they would go into a queue and wait to be executed.

A few days prior to the incident, a programmer took it upon himself to unilaterally improve SmartWB by adding a new user input feature, which would let a trader change a certain parameter on-the-fly. When a user changed the parameter, all the new orders that came out of SmartWB would reflect the change, and all of the existing orders in the queue waiting to be executed would instead be cancelled and replaced with otherwise identical orders that contained the tweaked parameter.

The interface for inputting this new parameter was really simple—and really, really stupid. There was a box for the trader to enter a number, and a pair of arrows next to the box: "up" and "down." Pressing the "up" arrow would revise the parameter upwards by the amount in the box, and pressing the "down" arrow would revise it downwards. After you clicked an arrow button, the new parameter would instantly take effect for all new orders, and all existing, queued orders would be cancelled and replaced with orders that reflected the change—no "Are you sure?" dialog box or any other form of sanity check, just instant execution.

The lack of feedback and "forgiveness" in the interface element would have been bad enough, but there was another problem, and one that would have been uncovered during testing... if there had been any testing, which there had not.

On November 14, a few seconds after 3:20, a trader put a number in the box and then double-clicked the "up" arrow. This double-click was interpreted by SmartWB as two separate clicks, so the system dutifully sent out a second batch of cancel/replace orders in addition to the batch that was intended by the trader. This sudden flood of cancel/replace orders, half of which were requesting cancellation of orders that had never been sent, overwhelmed the system and backed up five of the posts on the NYSE trading floor.

The incident wasn't a major catastrophe by any measure—it cost money, and overloaded a few posts near the close of the trading day, but otherwise it had no lasting effects. And the errors involved—a stray click, a bad UI decision, failures of testing and oversight—were all human errors, albeit amplified many times over by the speed and power of the network. You might even say that trader's the stray click was like the proverbial flutter of a butterfly's wing in China, except it didn't quite cause a hurricane in the Atlantic—just a nasty downpour.

Since 2007, our markets have moved drastically further in the direction of complete automation. But it's not clear that Wall Street's programmers have made correspondingly large leaps in testing, UI design, and version control. Indeed, on message boards and blogs, day traders who follow the market tick-by-tick swap stories of huge swings in a stock price, where a stock plunges or spikes but then corrects in a few minutes, after the exchange realizes there was an error and cancels the trades.

These glitches are typically attributed to high-frequency trading algorithms gone temporarily insane—"algos gone wild" is the preferred phrase. It is suspected that Rambus's stock was the victim of of an algorithm-driven selloff early this year.
The Rambus incident

On the afternoon of January 4, 2010, Rambus's stock lost 35 percent of its value in a matter of seconds. NASDAQ ended up canceling all trades at or below $20.73, and blamed the error on some unspecified trader's "fat finger."

Anecdotally, bizarre market action like this is becoming a fact of life for day traders, who now have to take extra measures to guard against being hurt by these moves. For instance, many day traders use automated "trailing stops" if they're going to be away from a terminal for a few hours—these stops dictate that if a stock drops by a certain amount, then the trader's platforms should put in an automated sell order to dump the security before it goes down even further.

If a trader was using an automated trailing stop on Rambus on January 4th, his system would've dumped the stock automatically, incurring a trading fee and possibly even losing money, only to see the stock jump back up again.

Of course, the fact that such computer-driven volatility hurts day traders matters little to long-term investors. But the fear is that these glitches are fleeting indications that the system as a whole is vulnerable and unstable, and that the right combination of circumstances could cause what happend to RMBS to happen on a wider scale. This is especially true as even more of the trading activity, even among individual traders, shifts to automated platforms.
Epilogue: From mainframe to PC

One trend of the past year that has been covered at the Financial Times and other outlets is the democratization of computer-automated trading. Small two- and three-person trading shops, manned by a laid-off quant or two and a programmer, are cropping up all over the country and combining the latest gaming-oriented GPU and CPU hardware with standard electronic trading accounts to do algorithmic trading on a small scale.

Because these groups are using commodity gaming hardware to generate "buy" and "sell" orders that are then transmitted to the market using standard retail trading software, there's no way to tell them apart from normal (human) day traders. Thus, there's absolutely no way to gauge how large of a phenomenon this actually is.

The Obama administration's efforts to rein in high-frequency trading by eliminating flash orders and banning proprietary trading (much of which is HFT-based) from large banks will probably have the effect of leveling the playing field a bit for these smaller algo shops. As Matthew Goldstein at points out in his Reuters article on the topic, the prop desks may disappear, but the software and expertise will not. Instead of being concentrated at a few large banks, algo trading will just spread, as the talent behind it either jumps to new funds or goes solo.

And if, thanks to further government intervention, the big boys ultimately lose some of the latency advantage that their deep pockets buy them, then the future of the market could well belong to hundreds of thousands of small trading operations who, instead of playing Crysis on their top-of-the-line Alienware systems, use them to print money instead.

[America2]

I don't believe this for one second - OTOH, this could be another caused-mini crisis so the government can make the case to control our internet.

How a stray mouse click choked the NYSE & cost a bank $150K
http://arstechnica.com/business/news/2010/01/how-a-stray-mouse-click-choked-the-nyse-cost-a-bank-150k.ars
By Jon Stokes | Last updated January 27, 2010 8:51 PM

fat fin·ger |fat 'fi NG gər |, verb, to enter a trade order incorrectly into an electronic stock trading system: He fat-fingered that sell order by accidentally adding two zeroes.

The term comes from the idea of a clumsy, "fat-fingered" typist, who presses extra keys without being aware of it.

As the practice of high-frequency trading continues to become more widespread, concerns are growing that erroneous trades carried out by "algos gone wild"—a sort of digitally amplified version of the "fat finger" phenomenon—could cause a market crash at Internet speed, a meltdown that no one could stop. Two recent market glitches could provide a preview of what's to come.
Double-click of death: the Credit Suisse fiasco

Like Goldman, Sachs and other large banks, Credit Suisse has a proprietary trading desk—i.e., a division of the bank that trades stocks and derivatives in order to make money for the bank itself (instead of for the bank's customers). And, like other banks in its class, much of this proprietary trading is now done entirely by computers that execute trades by the millisecond based on tiny, fleeting fluctuations in a stock's price.

On November 14, 2007 at 3:20pm one of Credit Suisse's trading algorithms suddenly went haywire, and, in a few moments, sent hundreds of thousands of bogus requests to the exchange. This sudden surge of requests, which were cancellations for a large batch of orders that the machine had never actually sent out, acted like a denial-of-service attack on some parts of the New York Stock Exchange. The messages clogged the tubes and caused parts of the exchange to freeze up, affecting trading in 975 stocks.

After an extensive investigation, the NYSE assessed a $150,000 fine for Credit Suisse's "failing to adequately supervise the development, deployment and operation of a proprietary algorithm, including a failure to implement procedures to monitor certain modifications made to the algorithm."

The exchange's filing, released a little over a week ago, has the details of precisely what drove the algorithm haywire—it was a trader who accidentally double-clicked an icon in a trading program's interface, when he should've single-clicked. No, I am not making that up.
And you thought butterfly ballots were bad UI design

The algorithm that choked is part of a program called SmartWB, and it was designed to spit out a constant stream of trading orders all day long, using a set of fixed parameters. These orders would be transmitted to the NYSE, where they would go into a queue and wait to be executed.

A few days prior to the incident, a programmer took it upon himself to unilaterally improve SmartWB by adding a new user input feature, which would let a trader change a certain parameter on-the-fly. When a user changed the parameter, all the new orders that came out of SmartWB would reflect the change, and all of the existing orders in the queue waiting to be executed would instead be cancelled and replaced with otherwise identical orders that contained the tweaked parameter.

The interface for inputting this new parameter was really simple—and really, really stupid. There was a box for the trader to enter a number, and a pair of arrows next to the box: "up" and "down." Pressing the "up" arrow would revise the parameter upwards by the amount in the box, and pressing the "down" arrow would revise it downwards. After you clicked an arrow button, the new parameter would instantly take effect for all new orders, and all existing, queued orders would be cancelled and replaced with orders that reflected the change—no "Are you sure?" dialog box or any other form of sanity check, just instant execution.

The lack of feedback and "forgiveness" in the interface element would have been bad enough, but there was another problem, and one that would have been uncovered during testing... if there had been any testing, which there had not.

On November 14, a few seconds after 3:20, a trader put a number in the box and then double-clicked the "up" arrow. This double-click was interpreted by SmartWB as two separate clicks, so the system dutifully sent out a second batch of cancel/replace orders in addition to the batch that was intended by the trader. This sudden flood of cancel/replace orders, half of which were requesting cancellation of orders that had never been sent, overwhelmed the system and backed up five of the posts on the NYSE trading floor.

The incident wasn't a major catastrophe by any measure—it cost money, and overloaded a few posts near the close of the trading day, but otherwise it had no lasting effects. And the errors involved—a stray click, a bad UI decision, failures of testing and oversight—were all human errors, albeit amplified many times over by the speed and power of the network. You might even say that trader's the stray click was like the proverbial flutter of a butterfly's wing in China, except it didn't quite cause a hurricane in the Atlantic—just a nasty downpour.

Since 2007, our markets have moved drastically further in the direction of complete automation. But it's not clear that Wall Street's programmers have made correspondingly large leaps in testing, UI design, and version control. Indeed, on message boards and blogs, day traders who follow the market tick-by-tick swap stories of huge swings in a stock price, where a stock plunges or spikes but then corrects in a few minutes, after the exchange realizes there was an error and cancels the trades.

These glitches are typically attributed to high-frequency trading algorithms gone temporarily insane—"algos gone wild" is the preferred phrase. It is suspected that Rambus's stock was the victim of of an algorithm-driven selloff early this year.
The Rambus incident

On the afternoon of January 4, 2010, Rambus's stock lost 35 percent of its value in a matter of seconds. NASDAQ ended up canceling all trades at or below $20.73, and blamed the error on some unspecified trader's "fat finger."

Anecdotally, bizarre market action like this is becoming a fact of life for day traders, who now have to take extra measures to guard against being hurt by these moves. For instance, many day traders use automated "trailing stops" if they're going to be away from a terminal for a few hours—these stops dictate that if a stock drops by a certain amount, then the trader's platforms should put in an automated sell order to dump the security before it goes down even further.

If a trader was using an automated trailing stop on Rambus on January 4th, his system would've dumped the stock automatically, incurring a trading fee and possibly even losing money, only to see the stock jump back up again.

Of course, the fact that such computer-driven volatility hurts day traders matters little to long-term investors. But the fear is that these glitches are fleeting indications that the system as a whole is vulnerable and unstable, and that the right combination of circumstances could cause what happend to RMBS to happen on a wider scale. This is especially true as even more of the trading activity, even among individual traders, shifts to automated platforms.
Epilogue: From mainframe to PC

One trend of the past year that has been covered at the Financial Times and other outlets is the democratization of computer-automated trading. Small two- and three-person trading shops, manned by a laid-off quant or two and a programmer, are cropping up all over the country and combining the latest gaming-oriented GPU and CPU hardware with standard electronic trading accounts to do algorithmic trading on a small scale.

Because these groups are using commodity gaming hardware to generate "buy" and "sell" orders that are then transmitted to the market using standard retail trading software, there's no way to tell them apart from normal (human) day traders. Thus, there's absolutely no way to gauge how large of a phenomenon this actually is.

The Obama administration's efforts to rein in high-frequency trading by eliminating flash orders and banning proprietary trading (much of which is HFT-based) from large banks will probably have the effect of leveling the playing field a bit for these smaller algo shops. As Matthew Goldstein at points out in his Reuters article on the topic, the prop desks may disappear, but the software and expertise will not. Instead of being concentrated at a few large banks, algo trading will just spread, as the talent behind it either jumps to new funds or goes solo.

And if, thanks to further government intervention, the big boys ultimately lose some of the latency advantage that their deep pockets buy them, then the future of the market could well belong to hundreds of thousands of small trading operations who, instead of playing Crysis on their top-of-the-line Alienware systems, use them to print money instead.

[HAZMAT]

The real reason is that multiple Europan banks are rumored to have
halted their trading desks due to lack of liquidity...

The EU can't afford to print money like the US Fed to bail these guys
out...

If this proves to be true... dead cat bounce ...

[Dig]

I don't believe this for one second - OTOH, this could be another caused-mini crisis so the government can make the case to control our internet.

it is ridiculous. when the market finally tries to adjust to a natural equilibrium, the media stomps the head of truth into the ground to keep the matrix from coming undone.

the f-ing markets are owned by elite globalist pigs.

[Initiated]

I don't believe this for one second - OTOH, this could be another caused-mini crisis so the government can make the case to control our internet.

http://forum.prisonplanet.com/index.php?topic=169945.msg1010175;topicseen#msg1010175

[Dig]

More excuses rather than the obvious...You cannot keep selling people shit for decades without them realizing that something stinks! Especially while you are creating debt slavery upon billions with that same shit. The whole world needs a shower from Goldman Sachs shitting on the entire planet.

anyway, here is another Matrix soldering iron pieceing together this sputnik of insanity...

Preventing Disasters at Hedge Funds
http://www.securitiesindustry.com/blogs/-24950-1.html
Chris Kentouris
Securities Industry Blog, March 23, 2010

Hedge funds globally might attract $222 billion of fresh capital this year according to a survey issued by Deutsche Bank. This would mark the first annual net inflow since the global financial crisis erupted two years ago.

That sounds like good news for the much maligned hedge fund industry which posted some megalosses and redemptions at the height of the financial crisis. The eighth Deutsche Bank alternative investment survey, released March 16, polled asset managers, corporations, family offices, foundations and endowments, funds of funds, insurers, private banks, pension funds and investment  consultants with more than $1.07 trillion of hedge fund assets in January.

But investors shouldn’t be that confident about the safety of their assets in hedge funds.

Yet another study released by Richard Fleischman & Associates, a New York-based provider of outsourced technology and IT services last Friday, suggests that investors could be handing over their money to a wiz kid who could easily beat the market and might even be able to value assets correctly.

But he or she might not own a flashlight to make their way to the office in case of a blackout. Or find crucial customer data, if there should be a computer glitch.

Despite increased scrutiny from investors and the spectre of required registration, RFA’s analysis of 22 U.S. hedge funds based in New York, New Jersey and Massachussetts showed that hedge funds still aren’t prepared when it comes to basic disaster recovery and business continuity. They also aren’t keeping their customer and trading data secure.

In the event of a disaster – it doesn’t have to be a  terrorist attack– the  hedge fund manager won’t be able to continue trading because he or she can’t retrieve the necessary market data, historical information, technical analysis or real-time proprietary trading applications.

“The fund managers might not be able to execute its order through their order management system or trading blotter and even if they can over the phone they can’t confirm their trades with their broker dealer,” says Don Previti, a director at RFA in New York.

When it comes to data safety, the hedge fund could be the target of computer viruses, hackers rogue traders and other disgruntled employees who could easily walk away with confidential information, according to the firm.

            Just what do hedge funds think they will do to protect themselves? “The answers are pretty surprising. “Hedge funds didn’t think they needed a business continuity plan because it either cost too much or they were never faced a disaster which required them to retrieve their data,” says Previti.

            While RFA’s study may not be scientific – it studied a small pool of hedge funds and only those U.S. based, its findings strike a cord even with rivals.

Eze Castle Integration in Boston says that it has also come across plenty of hedge funds who don’t have a solid disaster recovery and business continuity plan.

Why not?

“Sometimes they think that if they back-up their data on a tape each night they will be able to retrieve it should a disaster strike,” says Bob Guilbert, managing director of ECI.

And yes, the hedge fund can retrieve the tape. But there is still no guarantee it can find the data it’s looking for or it can use the data if its power supply is out and other trade execution and processing applications don’t work.

While it would stand to reason that funds with more than $1 billion in assets under management would be better prepared than startups or mid-sized funds, such isn’t always the case. In fact, say Previti and Guilbert, it’s the startups that are far more savvy at their disaster recovery and business continuity plans.

Why?

“They are the ones which need to attract new institutional capital and their investors are asking for the information,” says Guilbert. “The larger ones were likely established several years ago when investors weren’t quite as discerning.”

When it comes to making certain that data is protected from another unexpected event – theft – the largest hedge fund managers are also faring the worst.  

Some don’t have encrypted passwords to prevent unauthorized employees – namely junior analysts or operations personnel – from accessing confidential client data or proprietary trading information.

Yet others have no way of ensuring a rogue trader doesn’t make off with information to take to a competing firm or trade for its own account. Not a smart move considering the hundreds of investor names and data as well as trading models which could be easily copied onto a laptop or blackberry.

So what must a hedge fund do to get its house in order?

Previti says that a fund has to conduct a step-by-step analysis of its disaster recovery, business continuity and data security plans when it is first launched.

If it hasn’t done so already, later is still better than never.

If it doesn’t know how to do so, it can always hire a firm such as RFA or ECI to do so.

A hedge fund can arm itself appropriately – that means paying for disaster recovery services where real-time hard copies of critical data and applications are always available if a disaster occurs.

Funds can choose to access the disaster recovery site by Internet or reserve space at a hot site that offers a physical desk.

For data security, firms can institute data loss prevention systems that protect data in transit and at rest. Or, of course, it can hire third parties such as RFA and ECI to help out.

Guilbert declined to disclose just how much such outsourcing would cost – it depends on the size of the firm and the number of applications involved, he says.  But at the very least it would be a turnkey solution and firms wouldn’t have to buy all the working parts to install themselves.

The best scenario: if a hedge fund has already implemented some sort of disaster recovery, business continuity and data security plan it better test those plans continually to make certain they work. That means the fund had better find out whether any of its employees can access data inappropriately or be able to copy proprietary data off of any applications.

The fund can also turn up its disaster recovery site every three months to make certain employees can log-in and access the files and applications they would need to continue their jobs, says Guilbert. Firms can also go into “disaster recovery mode” and have employees work from their disaster recovery systems all day.

Firms should also conduct exercises to test their business continuity plans. That means doing a structured walkthrough that stimulates a disaster incident and educates employees about their responsibilities during a business interruption. It’s a lot like conducting a fire drill.

If such preparations sound pretty expensive to undertake, then hedge funds should consider the cost of not being prepared.

If a state audit doesn’t scare them; maybe an SEC audit will. If that doesn’t do the trick, there is always the likelihood investors will walk out in droves.

That is if they don’t sue the hedge fund first.
In that case, they may end up owning the keys to the house and all the furniture. Or whatever is left of it. And starting over won’t be an option.

 

[Anti_Illuminati]

it is ridiculous. when the market finally tries to adjust to a natural equilibrium, the media stomps the head of truth into the ground to keep the matrix from coming undone.

the f-ing markets are owned by elite globalist pigs.

Their systems "clearly" need more interoperability to be immune to such glitches.

I smell the real beginning of Jay Rockefeller's:  "now is the time for cyberwar".

[carlee]

                     The Hindenburg disaster took place on Thursday, May 6, 1937,               http://www.supertorchritual.com/underground/

[Dig]

Their systems "clearly" need more interoperability to be immune to such glitches.

I smell the real beginning of Jay Rockefeller's:  "now is the time for cyberwar".

every fricking story i read today about energy, finances, healthcare, etc. talks about the need for interoperability...

INTEROPERABILITY IS THE LUCIFER PROJECT...IT IS THE NEW WORLD ORDER DEFINED

[Viper]

..INTEROPERABILITY IS THE LUCIFER PROJECT...IT IS THE NEW WORLD ORDER DEFINED

Indeed, the war on the individual by the totality.

[ImmortalTRUTH]

Trading Error Blamed For Market Plunge: CNBC

http://www.nytimes.com/reuters/2010/05/06/news/news-us-markets-stocks-cnbc.html?ref=reuters

NEW YORK (Reuters) - A trading error at a major firm was to blame for the day's market plunge, CNBC reported on Thursday.

Separately, Nasdaq said it was working with other major markets to review the market activity that occurred between 2:00 p.m. and 3:00 p.m.

The exchange said in an e-mail it would advise when more information was known.

[rawiron1]

Some expert on Bloomberg now saying this is only a 1/3 correction.  He said that even if a mistake was made the markets still would have dropped 300+ today.  He said expect the Dow to drop below 9K and S&P to drop below 1K.

Jason

[endof]

At the height of the panic, one trader, on the condition of anonymity, said he heard fixed-income desks in Europe shut down early because there was no liquidity — basically European banks are halting lending right now."This is similar to what took place pre-Lehman Brothers," the trader said.

http://www.cnbc.com/id/36988229

[Dig]

The Unknown $19 Trillion Depository Trust Company
http://forum.prisonplanet.com/index.php?topic=169950.0

?

[Dig]

Trading Error Blamed For Market Plunge: CNBC

http://www.nytimes.com/reuters/2010/05/06/news/news-us-markets-stocks-cnbc.html?ref=reuters

NEW YORK (Reuters) - A trading error at a major firm was to blame for the day's market plunge, CNBC reported on Thursday.

Separately, Nasdaq said it was working with other major markets to review the market activity that occurred between 2:00 p.m. and 3:00 p.m.

The exchange said in an e-mail it would advise when more information was known.

CORRECT! WE TRADED THE CONSTITUTION FOR iPADS!

[ImmortalTRUTH]

Errant Trade May Have Caused Market Plunge: Sources

http://www.nytimes.com/reuters/2010/05/06/news/news-us-market-selloff.html?ref=reuters

NEW YORK (Reuters) - The biggest intraday point drop ever in the Dow Jones Industrial Average may have been caused by an erroneous trade entered by a person at a big Wall Street bank, multiple market sources said on Thursday.

The so-called "fat finger" trade apparently involved an exchange-traded fund that holds shares of some of the biggest and most widely traded stocks, sources said. The trade apparently was put in on the Nasdaq Stock Market, sources said.

Several sources said the speculation is that the trade was entered by someone at Citigroup. A Citigroup spokesman said it was investigating the rumor but that the bank currently had no evidence that an erroneous trade had been made.

[citizenx]

Now NYSE says no tech problem.

http://finance.yahoo.com/tech-ticker/nyse-no-technical-problems-duirn-plunge-480290.html?tickers=

[Dig]

Errant Trade May Have Caused Market Plunge: Sources

http://www.nytimes.com/reuters/2010/05/06/news/news-us-market-selloff.html?ref=reuters

NEW YORK (Reuters) - The biggest intraday point drop ever in the Dow Jones Industrial Average may have been caused by an erroneous trade entered by a person at a big Wall Street bank, multiple market sources said on Thursday.

The so-called "fat finger" trade apparently involved an exchange-traded fund that holds shares of some of the biggest and most widely traded stocks, sources said. The trade apparently was put in on the Nasdaq Stock Market, sources said.

Several sources said the speculation is that the trade was entered by someone at Citigroup. A Citigroup spokesman said it was investigating the rumor but that the bank currently had no evidence that an erroneous trade had been made.

that makes me feel much better, that the entire financial system has been so manipulated that one click can send 200 million people into bread lines.

great article NY Times, good reporting!

[TahoeBlue]

I'm clairvoyant...

Exactly. They have been playing us for fools with these scams for over twenty years. They don't want to stop now.
They know that everyone is wise to them. I am sure they have planned on it. Just wait for the next shoe to drop.

another:

Goldman charged with fraud over Paulson's CDO trade - April 16, 2010

It is interesting that they time released this on a Friday with May  two weeks away ( In May go away ).

They couldn't make the market go much over 12000, so I am sure that there were people in the know shorting the market yesterday before the close.   

[TheProxy]

Stocks sink on Greek woes; did glitch add to panic?
The Dow plunges more than 1,000 points, then bounces back. An incorrect entry on a trade may have amplified the panic. Greece's parliament votes for the EU-IMF bailout despite intense protests.
Posted by Elizabeth Strott and Charley Blaine on Thursday, May 6, 2010 9:14 AM
?

http://articles.moneycentral.msn.com/Investing/Dispatch/default.aspx?feat=1751806&GT1=33002

No F'in Way.

[jofortruth]

http://z4.invisionfree.com/The_Great_Deception/index.php?showtopic=8318&st=0&







Absurd!   Lies and more lies!  

[Kilika]

Yeah, Cavuto was saying that too. They think it's a good cover, but it reveals how unstable the system is if what they claim is true. It means that a single person can wreck the whole market with one wrong push of a button. But of course it's an indication that the whole system is rigged, and Greece is their current patsy.

[endof]

PPT got in action big time..then they covered it up.

[jofortruth]

Exactly!

[kevlar442]

Hell, I'd bet the PPT spent a trillion dollars today.

[kevlar442]

Did they mean this button pusher?

"Sorry folks, wrong button! I meant to hit 'buy'"

[jofortruth]

Good one, kevlar442!  Yeah, we know who the real 'button pushers' are!

[Guns Equal Freedom]

In my opinion, I think they "are cover it up the fact" the Dow Jones Industrial was down like 500 points for a while and the "control crisis" even "got out of hand" for the "manipulates" to "even hand too".

The Greek People are "Real Patriots" to what The United States' Founding Fathers "intended".

"The Economic Wildfire" has been set around the world.

The Stupid Mass Media thinks The Greek People are protesting because, "they are all Lazy Communist Bums taking welfare" in a "welfare state".

It might be part of that, but even the majority of Greek People realize that their interests rates will go up and their country will be practically no more.

I gueuss they rather start all over than deal with a big Nation Debt.

Abraham Lincoln would be proud of The Greek People in protest the interest rates, because Abraham Lincoln had it happen to him when American's Own Bank wanted to lend Abraham Lincoln and The United States' Army to fight the Civil War which is why Abraham Lincoln made his own money to fund The United States Army with money with no interest rates behind it.