--Nasdaq cancels premarket trades in nine companies
--Big names affected include Goldman, Citigroup and AT&T
--Exchange busts trades from 9:29 a.m. through 9:30 a.m. EST
marked at more than 10% above or below Wednesday's closing
price
(Updates with additional information throughout.)
By Kaitlyn Kiernan and Matt Jarzemsky
NEW YORK--Some premarket transactions in nine big-name stocks
were canceled Thursday morning, in the latest example of the
trading glitches that have plagued markets this year.
Transactions for shares from companies including Citigroup Inc.
(C), Goldman Sachs Group Inc. (GS) and Hewlett-Packard Co. (HPQ)
were busted, according to a trader notice from Nasdaq OMX Group
Inc. (NDAQ). Nasdaq was the only exchange to cancel
transactions.
The bad trades came from a securities firm that was sending in
transactions based on faulty data, according to people familiar
with the trading problems. It wasn't clear from where the bad data
originated.
The vast majority of U.S. stock trading occurs between 9:30 a.m.
and 4 p.m. New York time, but exchanges such as Nasdaq and NYSE
Euronext's (NYX) all-electronic Arca conduct trading before and
after those hours. Nasdaq's premarket trading starts at 8 a.m.
EST.
Nasdaq canceled trades in nine companies that were executed on
its exchange in the minute before markets opened Thursday. Trades
executed at more than 10% above or below Wednesday's closing values
were busted, according to the notice sent to traders. The decision
followed erratic early trading in the stocks.
For example, in the second before 9:30, several bursts of
Citigroup trades pulled the stock's price down from about $36 to as
low as $20.10, according to a Wall Street Journal analysis of
FactSet data. Most of the 49 Citigroup transactions that were later
canceled were 100-share orders at $29.99.
The same period saw 101 canceled trades in Hewlett-Packard's
stock, which briefly jerked the price from $14.55 to as low as
$3.06.
In all, the exchange canceled 402 trades involving 141,629
shares, according to data provider Nanex. Other companies that saw
trades canceled in their shares included AT&T Inc. (T), Western
Union Co. (WU), Wells Fargo & Co. (WFC), Kroger Co. (KR),
Ventas Inc. (VTR) and Sprint Nextel Corp. (S).
International Business Machines Corp. (IBM), Salesforce.com Inc.
(CRM) and several other stocks saw price swings around the same
time, triggering an investigation from Nasdaq. But those
transactions were allowed to stand, according to the Nasdaq
notice.
A New York Stock Exchange representative said its trading wasn't
affected. Spokesmen from BATS Global Markets and Direct Edge said
separately that those two exchange operators also didn't have any
trades affected.
Trading glitches have drawn headlines in the wake of 2010's
"flash crash" and technical problems that roiled Facebook Inc.'s
(FB) initial public offering this year. But Justin Schack, managing
director with Rosenblatt Securities Inc., which researches market
issues, said they typically affect professional traders and not
individual investors.
"Do we want to see stuff like this happen? Definitely not. But,
for the most part, these don't affect the everyday investor in a
negative way," Mr. Schack said.
This marked the second time this week issues have arisen
regarding trading ahead of the U.S. market's 9:30 a.m. EST open. On
Wednesday, confusion over dividend payments to holders of shares of
fiber-optics company Tellabs Inc. (TLAB) was suspected to be behind
sharp swings in its shares in the premarket. Some investors
appeared to think the cutoff for receiving the dividend was this
week as opposed to later this month.
Write to Kaitlyn Kiernan at kaitlyn.kiernan@dowjones.com and
Matt Jarzemsky at Matthew.Jarzemsky@dowjones.com
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