Explaining the NYSE Glitch That Tanked Berkshire Hathaway by 99% in ONE second

[@PreetBanerjee]

Oof - sorry for the flickering image. I accidentally recorded in a different frame rate that doesn't play nice with the lights. And double sorry if you didn't notice it until I pointed it out.

[@kevin-jm3qb]

someone made billions on those trades. 15 seconds is an eternity.

[@PreetBanerjee]

It looks like the trades got busted (meaning they will be reversed).

[@Okok66567]

Casinos don’t let the big catch just walk out my man

[@TheGuinever]

Cancelled

[@MyMathProfessor]

I remember when they told us that the Flash Crash in 2010 was fake, just a fat fingered mistake. (But that was a lie.)

[@PreetBanerjee]

@@MyMathProfessor It does seem like a better way to police LULD would be to trigger a guardrail halt before passing the information through the SIP, as opposed to waiting for a trade outside the prescribed band. Something doesn't smell perfectly alright, but as a matter of scale, so far this seems quite minor compared to the flash crash so I don't know if we'll hear much more about it.

[@marcn5733]

A glitch video would be great fun!

[@IllWeeZee]

I agree

[@aaronhector]

Thanks Preet, great explainer! PS - do you have a classic red telephone booth in your flat? Amazing.

[@PreetBanerjee]

Thanks! It’s actually a wooden replica which serves as a whisky cabinet 😊

[@littleninjai222]

Well you answered all my questions in this video. Didn't even notice a glitch. Can't wait for the next. Video...not glitch. :)

[@PreetBanerjee]

Thanks! I think my next video will likely be on my Canadian channel... but we shall see 😊

[@Slicknick72636]

Can you explain the settlement times piece I think many people don’t know that purchasing stock has a settlement time of T+2

[@user-jj9vx2wk9x]

If I buy a few shares at a price of 168, do I still ask to return them?

[@PreetBanerjee]

If the trades get busted, then it will be like your trade never happened. No one will ask, it’ll just happen.

[@dianelili8598]

What happens to people who made money in this situation by trading CFD?

[@NiklasAndersson7]

I guess this is one of the reason we avoid market orders. A video on glitches might be interesting. I understand that this case was a clear technical error, but I guess the famous 2010 'flash crash' was legit, because it was triggered by actual orders, and the trading bots went haywire when the stop-loss orders triggered one another like the 'Kessler Effect'... :-D

[@cherylhurst]

Is there a glitch that makes me a millionaire..?

[@PreetBanerjee]

Not having kids

[@Paintotheworld11]

46 stocks were sold at 185. Any updates on those

[@PreetBanerjee]

Yes - NYSE confirmed that any trades at or below $603,718.30 would be busted.

[@novaordemdesantiago1890]

Basically we can lose everything with a click os a button

[@PreetBanerjee]

Luckily the glitch was caught and corrected within a few hours

[@ShortBudgetProductions]

How? There are no glitches just revalue.

[@PreetBanerjee]

Why revalue if there wasn’t a glitch to cause a misvalue?

[@ShortBudgetProductions]

@@PreetBanerjee the ting you call a glitch is the revalue

[@PreetBanerjee]

@@ShortBudgetProductions So the class A shares dropped 99% but the class B remained normal. Are you saying this isn’t a sign of a glitch?

[@Teah8cbdude]

Ok I have a question about gme shares, since technically none exist. What is that considered? A glitch? Do those who bought recently actually have these shares? We all know there's no more gme shares behind the scenes

[@PreetBanerjee]

I’m not sure I understand: are you saying no shares of GameStop exist?

[@Teah8cbdude]

@@PreetBanerjee yes

[@PreetBanerjee]

@@Teah8cbdude Do you have a credible source for that?

[@Teah8cbdude]

@@PreetBanerjee the people who were shorting, where were they getting those shares? What are synthetic shares?

[@PreetBanerjee]

@@Teah8cbdude Ah I think I see what you are asking. A synthetic share is when you use a combination of instruments (like derivatives) to give the same payoff as a position in an underlying security. In other words, you could create a position using a combination of options that would perform the same as just holding short the underlying stock. The existence of synthetic shares does not mean there are no actual underlying shares. So there can be actual shares that exist as well as synthetic positions.

[@brandonserna1177]

Cool so you can lose everything but when you finally win they say hey not valid because you won too much too fast....

[@BenoitStPierre]

If you make a video about historical glitches for fun - I will watch it for fun 😃

[@PreetBanerjee]

Deal!

[@lindenmeyer11]

It’s about time to turn the stock market into Block Chain transactions…

[@PreetBanerjee]

It seems that is a good use case for the technology for sure

[@MrRellgrant]

Man I got a few of them at 185 and they got reversed 😭

[@PreetBanerjee]

Must have felt pretty awesome for a minute… but not so nice to see it reversed :(

[@MasterTactics]

I wonder if the stock jumped to $10 million a share and someone bought it. And then it went down 600K, would they reverse it and call it a glitch.

[@PreetBanerjee]

@@MasterTactics If the reason for the jump could be linked to a clearly erroneous execution reason, then it would likely get cancelled yes. For both the person who who bought and for the person who sold it.

[@AteamerHFF]

Did anyone make money off this??

[@PreetBanerjee]

All trades below a certain amount (I think they said it was about $603,000) would be cancelled. To the extent that an HFT firm or algo shop were trading down to that threshold, there might have been some anomalous gains. Beyond that, I don't know if anyone would have made outlier gains from the situation.