The most awkward flash-crash possible

When your stock exchange wipes 99.75 per cent off its own value in less than a second, it might be t

Felix Salmon shows us his chart of the day, from Zerohedge (click for big):

He explains:

What you’re seeing here is the price of shares in BATS, at 11:14 [Friday] morning [ET]. The white spots are trades: there are 176 of them altogether. They start just below the IPO price of $16, and then just fall lower and lower and lower until the stock is trading for mere pennies. But the key number you want to look at here is not on the y-axis. Instead, it’s the chart report at the very top:

Elapsed Time: 900 Milliseconds

BATS, which stands for Better Alternative Trading System (a name which will surely come to haunt them), is a stock exchange based in Kansas. While most American stocks are listed in one of the two big exchanges, NYSE or Nasdaq, there are multiple venues where stocks can be traded – around 50. These exchanges communicate with each other to work out a "national best bid/offer" (NBBO), which is kept consistent throughout the venues. At least, that's the plan.

What appears to have happened is that a "software bug" (BATS aren't particularly forthcoming with the details) severed, or otherwise corrupted, the link between BATS and the NBBO system for all stocks beginning with A or B. This combined with the high-frequency trading that operates heavily in BATS (indeed, which it was largely set-up to enable) to allow stocks to plummet in less than a second.

For the most part, no-one was hurt. The error was confined to the one exchange, which rolled back the transactions. We would have all learned a valuable lesson about the dangers of computer-aided trading, the proponents of a financial transactions tax would have another weapon in their armoury (high-frequency trading isn't financially viable with a financial transactions tax in place), and everything would go back to normal. We would have, were it not for an excruciating coincedence:

The share that is charted above is that of BATS itself - that is, the company running the stock exchange which suffered the glitch. Not only that, it is the value of BATS on the day it held its initial public offering. Awkward.

BATS the company was supposed to be the first one to be listed (as opposed to merely exchanged) on BATS the exchange. For a smallish company based in a suburb of Kansas City, that is quite a big power grab. Needless to say, it didn't go to plan. The IPO is now cancelled, and the company has "no plans" to try it again soon. Which is unsurprising.

London 2004, back when trades were done by people, not Skynet. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Nobody's bargaining chips: How EU citizens are fighting back against Theresa May

Immigration could spike after Brexit, the Home Affairs select committee warned. 

In early July, EU citizens living in Scotland received some post from the First Minister, Nicola Sturgeon. The letters stated: “The immediate status of EU nationals living in Scotland has not changed and you retain all the same rights to live and to work here. I believe those rights for the longer term should be guaranteed immediately.”

The letters were appreciated. One Polish woman living on a remote Scottish island posted on social media: “Scottish Government got me all emotional yesterday.”

In reality, though, Sturgeon does not have the power to let EU citizens stay. That rests with the UK Government. The new prime minister, Theresa May, stood out during the Tory leadership contest for her refusal to guarantee the rights of EU citizens. Instead, she told Robert Peston: “As part of the [Brexit] negotiation we will need to look at this question of people who are here in the UK from the EU.”

As Home secretary in an EU member state, May took a hard line on immigration.  As PM in Brexit Britain, she has more powers than ever. 

In theory, this kind of posturing could work. A steely May can use the spectre of mass deportations to force a hostile Spain and France to guarantee the rights of British expat retirees. Perhaps she can also batter in the now-locked door to the single market. 

But the attempt to use EU citizens as bargaining chips may backfire. The Home Affairs select committee warned that continued policy vagueness could lead to a surge in immigration – the last thing May wants. EU citizens, after all, are aware of how British immigration policy works and understand that it's easier to turn someone back at the border than deport them when they've set up roots.

The report noted: “Past experience has shown that previous attempts to tighten immigration rules have led to a spike in immigration prior to the rules coming into force.”

It recommended that if the Government wants to avoid a surge in applications, it must choose an effective cut-off date for the old rules, whether that is 23 June, the date Article 50 is triggered, or the date the UK finally leaves the EU.

Meanwhile, EU citizens, many of whom have spent decades in the UK, are pursuing tactics of their own. UK immigration forms are busy with chatter of UK-based EU citizens urging one another to "get your DCPR" - document certifying permanent residence - and other paperwork to protect their status. More than 1,000 have joined a Facebook group to discuss the impact of the referendum, with hot topics including dual nationality and petitions for a faster naturalisation process. British citizens with foreign spouses are trying to make the most of the "Surinder Singh" loophole, which allows foreign spouses to bypass usual immigration procedures if their British partner is based in another EU country. 

Jakub, a classical musician originally from Poland, is already thinking of how he can stay in the UK, where there are job opportunities for musicians. 

But he worries that although he has spent half a decade in the UK, a brief spell two years ago back in Poland may jeopardise his situation.“I feel a new fear,” he said. “I am not sure what will happen next.”