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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The murder of fearless journalist Pavel Sheremet must be solved - but Ukraine needs more

Sheremet was blown up as he drove to host a morning radio programme

On 20th of July Kiev was shaken by the news of the assassination of the respected Belarusian journalist Pavel Sheremet. Outside the ex-Soviet republics he was hardly known. Yet the murder is one that the West should reflect on, as it could do much to aggravate the Ukrainian-Russian conflict. 

Sheremet was one of the most significant and high profile investigative journalists of his generation. His career as an archetypal  examiner of the post-Soviet regimes in Belarus, Ukraine and Russia bought him fame and notoriety in the region. From 1997 onwards Sheremet became a name for fearless and non-partisan interrogation, both in print and as also as TV presenter. He paid the price early on when he was incarcerated by the Belarus government, then stripped of his Belarusian nationality and deported. Such is the way of things in the region.

Taking up residence in Kiev, Sheremet became immersed in interrogating the political life of Ukraine. He wrote for the Ukrayinska Pravda publication and also helped to develop a journalism school. Under these auspices he was a participant of a congress, "The dialogue between Ukraine and Russia", in April 2014. He reported on beginnings of the Euromaidan uprising. He warned of the rise of the concept  of "Novorossia" and suggested that Ukraine needed to reset its current status and stand up to Russian pressure. After the Russian occupation of Crimea his blame for the Ukrainian government was ferocious. He alleged that that they "left their soldiers face to face the [Russian] aggressor and had given up the Crimean peninsula with no attempt to defend it." These, he said "are going to be the most disgraceful pages of Ukrainian history."

Sheremet was blown up at 7.45am on 20 July as he drove to host a morning radio programme.

Ukraine is a dangerous place for journalists. Fifty of them have been murdered since Ukraine achieved independence. However, this murder is different from the others. Firstly, both the Ukrainian President and the Interior minister immediately sought assistance from FBI and EU investigators. For once it seems that the Ukrainian government is serious about solving this crime. Secondly, this IED type assassination had all the trappings of a professional operation. To blow a car up in rush hour Kiev needs a surveillance team and sophisticated explosive expertise. 

Where to lay the blame? Pavel Sheremet had plenty of enemies, including those in power in Belarus, Russia and the militias in Ukraine (his last blog warned of a possible coup by the militias). But Ukraine needs assistance beyond investigators from the FBI and the EU. It needs more financial help to support credible investigative journalism.   

The murder of Pavel Sheremet was an attack on the already fragile Ukrainian civil society, a country on the doorstep of the EU. The fear is that the latest murder might well be the beginning of worse to come.

Mohammad Zahoor is the publisher of Ukrainian newspaper The Kyiv Post.