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Aug. 25, 2010, 12:35 p.m. EDT

LSE: Circuits Helped Avert Market Crash

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By Luke Jeffs

LONDON—Circuit breakers prevented sudden losses in five stocks Tuesday afternoon on the London Stock Exchange from causing a wider market crash, the exchange's operator said.

The prices of five LSE-listed stocks—BT Group PLC, Hays /zigman2/quotes/208836868/delayed UK:HAS +0.36% PLC, Next /zigman2/quotes/202538478/delayed JP:2120 +0.25% PLC, Northumbrian Water Group /zigman2/quotes/209265718/delayed UK:NWG -0.43% PLC and United Utilities Group /zigman2/quotes/203908003/delayed UK:UU -0.30% PLC—started to fall at 2 p.m. local time.

The cause is unknown but brokers who were watching the market at the time said Tuesday that it looked like a "fat finger" trade, in which a trader pushes a wrong key or sequence of keys, or a glitch in an algorithm that automatically generates orders.

The impact of the selloff was limited, however, because the LSE's automatic circuit breakers kicked in when the losses in these stocks neared 10% and trading in them was suspended. The exchange then canceled all sell orders on the stocks and reopened trading after five minutes, at which time the shares rebounded within a few minutes to their levels before the mini-crash. The FTSE 100 index wasn't affected by the sudden fall of the five shares.

London Stock Exchange Group PLC heralded the intervention as a small victory at a time when the European market model has been called into question following the May 6 "flash crash," when the Dow Jones Industrial Average fell nearly 1,000 points after a similar selloff in a handful of stocks that wasn't stopped.

BT Group, Hays and Northumbrian Water Group declined to comment while Next and United Utilities were unavailable for comment.

/zigman2/quotes/208836868/delayed
UK : U.K.: London
166.00 p
+0.60 +0.36%
Volume: 2.62M
April 14, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£2.77 billion
Rev. per Employee
£568,069
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/zigman2/quotes/202538478/delayed
JP : Japan: Tokyo
¥ 405.00
+1.00 +0.25%
Volume: 115,300
April 15, 2021 1:14p
P/E Ratio
51.29
Dividend Yield
0.99%
Market Cap
¥53.11 billion
Rev. per Employee
¥27.92M
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/zigman2/quotes/209265718/delayed
UK : U.K.: London
£ 197.35
-0.85 -0.43%
Volume: 8.63M
April 14, 2021 4:35p
P/E Ratio
N/A
Dividend Yield
0.02%
Market Cap
£22.91 billion
Rev. per Employee
£237,730
loading...
/zigman2/quotes/203908003/delayed
UK : U.K.: London
944.00 p
-2.80 -0.30%
Volume: 1.47M
April 14, 2021 4:35p
P/E Ratio
58.60
Dividend Yield
4.53%
Market Cap
£6.46 billion
Rev. per Employee
£337,748
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