Wednesday, July 8, 2015

NY Stock Exchange "Historic Halt" Post-Mortem, BRICS Officially Launches

This Is the Message Anonymous Posted Last Night Before the New York Stock Exchange Outage |

The night before the New York Stock Exchange temporarily suspended trading due to an “internal technical issue,” the hacker collective Anonymous had a cryptic message for Wall Street on Twitter.
“Wonder if tomorrow is going to be bad for Wall Street…. we can only hope,” said the tweet posted at 11:45 p.m. Tuesday.
The NYSE said it was experiencing a technical issue Wednesday afternoon and said it was not the result of a cyberbreach. Both the Department of Homeland Security and the White House said there was no indication of malicious actor involvement.
“We’re experiencing a technical issue that we’re working to resolve as quickly as possible,” the NYSE said in a statement. “We’re doing our utmost to produce a swift resolution & will be providing further updates as soon as we can.”

What began as a glitch in pre-market trading turned into the NYSE's longest trading halt since Hurrican Sandy battered the East Coast. The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break. While NYSE traders defended the very market structure they have abhorred in the past as evidence that today was "not a failure," we can't help but find CNBC's Scott Wapner's amusing remark that "if retail investors want low cost liquid trading they are going to have learn to live with it" the perfect post-mortem for a rigged system brimming with confident insiders ever excited to take mom-and-pop's money.
As Bloomberg reported, "What began Wednesday morning with a seemingly workaday software glitch soon escalated into one of the most startling computer outages in Wall Street history -- and, for the Big Board, a race against the clock."

At the 9:30 a.m. opening bell, traders’ orders for some stocks weren’t reaching the proper destinations for processing. Techies were frantic to fix the problem. At about 9:32 a.m., they succeeded.

Two hours later, boom.

One floor trader started shouting, “My handheld’s down! My handheld’s not working!” He and other traders hurried over to a ramp on the trading floor where NYSE executives usually meet with them to explain any problems. Not today. Three hours later, still nothing. Everyone was just standing around.

“The order flow wasn’t being entered into the display books on the trading floor,” said Pete Costa, president of Empire Executions Inc. who’s worked at the exchange in downtown Manhattan for 34 years. “As soon as that happened, the exchange shut down to understand what was going on.”

Every computer screen “went this pukey, canary yellow color,” Costa said. “That means the stock has stopped trading.”

NYSE BREAK #1 Occurred shortly before the market open as the SNB-driven rebound from overnight weakness was beginning to fade...

The issues were resolved shortly after the market opened... and stocks then plunged:

The tumbling stock market meant there was only one option:
NYSE BREAK #2 Occurred shortly before the European close...

But then, once that problem was resolved, stocks plunged again, which left only one option for the PPT which learned its lesson from China where if there is selling, just halt the stocks being sold.

NYSE BREAK #3 - The Big One started shortly after the European close with stocks near the lows of the day...

And this happened:

The NYSE CEO told CNBC that he "didn't know" if the early halts and glitches were related to the catastrophe that halted the entire exchange for almost 4 hours. Well as a help for him, here is a simple chart from Nanex that shows the last group of trades before the NYSE Blackout were in the same stocks they reported an issue with earlier in the day...

Here is the "official" reason according to the NYSE CEO:

RUHLE:  And do you attribute this to a system upgrade? 

FARLEY:  I'm not 100 percent certain, because as I said, most of the day I spent with customers and staff.  There was a configuration problem in our system.  It likely had to do with an upgrade, but that is premature, and it's something that will come about as part of a full analysis of the situation.

The New York Stock Exchange came to a screeching halt amid what the NYSE said were "technical issues that affected symbols," according to Bloomberg's Julie Hyman.

That's not all though. According to USA Today:
The losses in U.S. stocks following a global selloff Wednesday accelerated when trading at the New York Stock Exchange suddenly halted for unknown technical reasons.
The Dow Jones industrial average was already off 177 points to 17,600 when at 11:32 a.m. ET trading in all securities on the NYSE stopped.

Even with the NYSE shut down, stock losses accelerated with the Dow's loss briefly exceeding 200 points. The outage didn't affect other markets including the Nasdaq Stock Market. In fact, trading in NYSE-listed stocks was still occurring on other exchanged, including the Nasdaq.

By 1 pm EST, the Dow had dropped 163 points to 17,614, the Standard and Poor's 500 index dipped 1.1% and the Nasdaq composite index was off by 1.3%.
Forecasters have been warning that this fall the markets are in for a shock that could be devastating for the economy. Is this just a prelude to that or is this merely a technical difficulty?

Before the Asian Infrastructure Investment Bank and, to a lesser extent, the Silk Road Fund became international symbols for the end of Western economic hegemony, there was the BRICS Bank. 
Or at least there was the idea of the BRICS bank. 
The supranational lender imagined by Russia, China, Brazil, India, and South Africa is, like the AIIB, largely a response to the failure of US-dominated multilateral institutions to meet the needs of modernity and offer representation that’s commensurate with the economic clout of their members. As Bloomberg points out, the countries’ combined economic output is now roughly equal to that of the US. “Back in 2007, the U.S. economy was double the BRICS,” Bloomberg notes.

On Tuesday, ahead of this year’s summit in Ulfa, the BRICS countries officially launched the new bank along with the reserve currency pool. Here’s WSJ:

The group of five major emerging economies known as Brics launched a development bank on Tuesday ahead of a summit in the Russian industrial city of Ufa, where Russia seeks to demonstrate it hasn’t been isolated by Western sanctions.

The long-planned development bank, aimed at financing projects mainly in member countries Brazil, Russia, India, China and South Africa, will select its first projects to finance by the end of the year, Russian Finance Minister Anton Siluanov said on Tuesday. The countries’ national banks also signed a deal Tuesday to create a $100 billion reserve fund by the end of July that can be tapped in financial emergencies.

The Bank of Russia said it signed an “operational agreement” with Brics counterparts to create a $100 billion pool of mutual reserves. The group agreed to create the fund in 2013 as an alternative to the International Monetary Fund, after seeing investors pull money away from emerging economies, causing their currencies to weaken.

The currency pool would be drawn on by the central banks of Brics states whenever they suffered a shortage of dollar liquidity, helping them maintain financial stability, Russia’s central bank said.

China will contribute $41 billion to the currency pool. Brazil, India and Russia will each provide $18 billion, while the remaining $5 billion will come from South Africa.

BRICS countries will definitely start using their local currencies for mutual settlements quite soon, the head of Russia’s VTB bank Andrey Kostin told RT Wednesday at the BRICS summit in Ufa.

“We definitely see a growing interest from the countries to make settlements in local currencies,” the CEO of Russia’s second biggest bank said. 40-50 percent of all the mutual settlements among the BRICS countries can be performed in domestic currencies, Kostin estimated, RIA reported.

The Chinese yuan as the leading currency can be used in settlements among BRICS member states, Kostin said, adding that the Russian ruble can be used for that as well.

He says there will be a growing interest from leading Russian exporters to the process of switching to national currencies.

And of course no story about the BRICS bank (or the AIIB for that matter) would be complete these days without some mention of Greece and the possibility that Athens may be forced to look elsewhere for help in the event it's driven out of the euro

Greece could get financing from the New Development Bank operated by Brazil, Russia, India, China and South Africa (BRICS) if it buys a few shares of the institution to become a member. The bank, which is set to begin operations next April, is seen an alternative to Western financing.

Deputy Russian Finance Minister Sergey Storchak said becoming a part of the bank would require Greek officials to make a political decision.

"We do not have any co-relation between a contribution and an amount of funding,” Russian news agency Tass quoted Storchak as saying. “There is general agreement that the system of the countries’ assets will be balanced."

Russian Finance Minister Anton Siluanov said Tuesday it is necessary for the new bank to "carve out a niche" since competition among international banks is intense.

Yes, the bank must "carve out a niche", and preferably one which takes every opportunity to undercut the influence of the US-dominated multilateral institutions that have defined the post-war world and served to underwrite six decades of dollar dominance. 

1 comment:

Unknown said...

If the US & Nato can't have their way, they will try everything to slaughter the people's of the world. Like David Rockefeller said I don't care who makes up the laws as long as I control the money.Wow this is all brought on by a handful of wicked people. Sin is definitely coming to a head.