We’re told that everyone on the Street is still buzzing about that Designated Market Maker (DMM) at the New York Stock Exchange who identified and prevented an erroneous order from occurring late last Friday saving a broker-dealer from losing millions of dollars.
Business Insider has learned it was a DMM from electronic market-maker Getco who spotted the erroneous order.
Here’s how it went down, according to the Reuters report.
At 3:59:59 p.m. Eastern time on Friday, a broker-dealer placed an order for 17 million shares of Monster Worldwide, which was trading at $8.50 a share, with no offers in site.
Typically, when an order comes in at the close, NYSE has a procedure to go out and solicit contra-side interests to fill the order, but given the thin book for Monster Worldwide, something smelled off this time, said Pastina.
The DMM saw it, alerted the operations staff, the stock was halted, and the broker-dealer was contacted. It turned out the broker-dealer did not want to buy Monster Worldwide. Rather, it was looking to buy an unspecified amount of Monster Beverage Corp, the Sara Lee coffee and tea spinoff that was a new entrant to the S&P 500.
A NYSE floor trader from a different firm, who spoke only on the condition of anonymity, told Business Insider that this shows another reason why their model–which combines human judgment with computerized trading–is more efficient, especially in light of the BATS and Facebook IPOs.
*If you have additional information, please feel free to send an email to [email protected] or IM Julia at JuliaLaRocheBI.