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Accenture (ACN) went from $40 to $.01 and back up to $40. http://www.google.com/finance?q=acn

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Probably a data issue. On a data source used by professionals it 'only' when down to 38.5 before going up again.

According to Bloomberg that was a real trade that went through.

and was later cancelled

http://www.businessweek.com/news/2010-05-06/nasdaq-says-inve...

"Eighteen of the trades were executed on the CBOE Stock Exchange and were canceled. The first trade that sent Accenture to a penny was executed on the Nasdaq Stock Market. That transaction has yet to be canceled, the data showed."

I dunno... seems more probably a blip in the data rather than value actually falling to $0.01 momentarily...

Most likely, it went "no-bid". At any given time, there're a bunch of people who have long-term $0.01 limit orders for a bunch of stocks. Markets work by matching up buyers and sellers; if there are no buyers at "normal" prices, the computer systems will start eating up those $0.01 bids that are placed and left in the computer systems without any expectation of being filled. The folks who place those orders become fabulously wealthy, the folks who tried to sell at any price get screwed.

It seems unbelievably unlikely that a stock traded with the volume of accenture could ever have no bids. Wouldn't you have to blow through all the people who put in limit orders for the company first? I don't see how this could possibly be true.

Yes, seems quite unlikely--but may still have happened.

Typically the exchanges break these trades after the fact (i.e., over the next 24 hours).

Why? Because the trade was "unfair?" I wonder what legal grounds they would have to break that trade.

Exchanges define rules, it's not a free for all. http://nyserules.nyse.com/nyse/

First off, shares have not yet changed hands. The two parties to the trade each have an agreement with clearing houses that the shares will change hands in the next 3 days, modulo various clauses.

One of the clauses lets the exchange break trades under certain circumstances, typically in the case of obvious errors and "unusual circumstances". So it's fairly likely that trades above and below a certain price on some stocks will be broken.

See Rule 11890 (c) (2) of the NASDAQ.

http://nasdaq.cchwallstreet.com/nasdaqtools/platformviewer.a...

[edit: I previously attributed the NASDAQ rule to NYSE.]

This is happening.

Nasdaq is breaking trades that occurred between 14:40 and 15:00 which executed at more than 60% away from the previous (consolidated) print price.

I'd like to see the legal basis for that.

I am trying to imagine the mechanics of what a "no-bid" situation would look like. Presumably you mean that one of the market makers would have to take the other side of the trade, but the rules for MM entities stipulate that they have to provide liquidity within certain bounds, not at all times and at any cost. Even if there were truly no bids -- which didn't happen -- the market maker would never make the market at $0.01.

Not a data blip after all, but the trades where canceld. From Bloomberg ( http://www.bloomberg.com/apps/news?pid=20601087&sid=a3ti... ) :

A total of 19 trades of 100 shares each were executed at 1 cent in seven seconds from 2:47 p.m. to 2:48 p.m. in New York, a minute after the Dow average plunged by the most since the market crash of 1987, the data showed.

Eighteen of the trades were executed on the CBOE Stock Exchange and were canceled. The first trade that sent Accenture to a penny was executed on the Nasdaq Stock Market. That transaction has yet to be canceled, the data showed.

Good lord, if you'd put $10 into that during the panic, you'd have $40000 now.

Someone has to actually sell you shares at that price for that to happen. It was likely a data error. No one is going to sell Accenture shares for a penny.

It was likely a data error. No one is going to sell Accenture shares for a penny.

Or a bit more precisely: Someone might have entered a big sell order at $0.01/share by mistake, but when this happens the stock exchanges usually undo those trades, so even if you think you bought ACN for $0.01/share, you probably didn't.

It's very likely that trade got busted almost immediately.

When I worked at an HFT shop broken trades were the bain of our existence. We had parameters to screen for trades that would probably be broken, but sometimes they would be broken outside of those. The way it works is either party to a trade can request the trade be broken, it goes to a mediator, and both sides make there case. It usually only takes a few minutes, but you can lose a bundle in that time especially if you were selling as the price is dropping, think you're flat only to have your sale broken.

It is possible that somebody did, however, it would have been a data entry mistake.

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