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Credit Suisse penalised by Nyse for algorithmic meltdown

13 January 2010  |  13305 views  |  0 Financial numbers

The New York Stock Exchange has fined Credit Suisse Securities $150,000 for failing to control development of an algorithm that went awry and flooded the Exchange trading system with hundreds of thousands of erroneous orders.

The meltdown occurred in 2007, when a Credit Suisse proprietary algorithm routed hundreds of thousands of cancel/replace requests to the Nyse for orders that had been previously generated but never posted.

The deal flow flooded the exchange's order processing systems and led to delays in closing five trading posts on the Nyse floor.

In imposing the fine, Nyse says Credit Suisse failed to properly supervise amendments to the algorithm by a trader that sent the program into a tailspin.

"The firm also failed to properly monitor the operation of the algorithm, as evidenced by the fact that the firm was unaware that hundreds of thousands of messages sent by the algorithm were being rejected by Nyse systems until being notified of the issue by Nyse Regulation the following day," says the Exchange.

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