Tuesday, July 26, 2011

OMG! They Tried To Explain The DRB Meltdown

In reference to this morning's posting: And DRB Went Into A Meltdown During Trading At Close.. Guess Who Came For Dinner, the financial edge carried the following explanation : here

  • Sources said the substantial decline in the stock’s price within 10 minutes prior to the close of trading happened when transaction instructions for three million DRB-Hicom shares by an institutional investor were keyed in wrongly by the brokerage. “It is believed that institutional investors had wanted to buy the shares (at the lower price of RM1.95). But the transaction was keyed in as a sell order instead,” the source told The Edge Financial Daily yesterday.
    The error, which occurred at about 4.50pm, had seen the three million shares transacted at RM1.95 until the closing bell. Prior to this at 4.48pm, the stock had changed hands at RM2.28, unchanged for the day.

Let's get this straight.

First the evidence once more.

Look at the data.

DRB was trading between 2.28 and 2.27.

So according to this source, the said institutional buyer wanted to key in buy. But apparently a mistake was made.

Ooopsy daisy me... the buyer keyed in sell instead.

Now let me be generous... and understanding... and trust for a moment that .... mistakes can indeed be made.

Is this ok?

Is not a problem for me.

Let's believe it is so.

Now let's think about the action again.

This is said to be an institutional investor. ( Hmm.. how I wish the name is given! )

Institutional investor, my friends.

Not any ordinary koptiam share market player hor.

So this INSTITUTIONAL INVESTOR wants to buy.... but the stock had been trading in a tight range all day... mostly between 2.27 and 2.28.

And this INSTITUTIONAL INVESTOR suddenly can come up with the brilliant idea to buy DRB at 1.95? (some 33 bids lower??)

And the order was keyed in at 4.50 pm... just when trading at last starts, just when no subsequent buy/sell transaction can alter this transaction price. ( Which means that this transaction will then become the closing day price! )

My say?

What a load of ketam!!!!!! 

Can anyone give me a 14 million reason why it just so happen that yesterday closing price of DRB is so important?


Kris said...

They did not highlight that this "mistake" is very very PROFITABLE to certain parties..

I bet making this business will make someone laughing to the bank instead of getting fired.

kine said...

Why they like to copycat the same exact reason given by New York Stock Exchange for the 1000 points drop in the price of Dow Jones index sometimes ago in May 2010 . Their reason is the very well known crap given that it's a mistake key-in due to fat-finger unintentionally being made on the keyboard . Voila! here it go & nobody is being penalise/blame. But the damage already being done to those who trade any derivatives product. Because of high leverage , their losses r much bigger than
fully paid equities. That why never touch any derivative product unless u can stay permanently to watch the price movement all the time.

ramatex said...

I thought our Bursa new rule is last 15min is not able to submit whatever transaction price we want? why that "institute investor" still can?

i thought new rule is to prevent someone to manipulate the market?

bonny b said...

Do u know that if u r a big investor who is not 'connected', and u buy or sell a significant amount of shares any day, your broker will get a friendly 'private' query from Bursa asking about yr identity, date of account opening etc. So, brokers immediately get the 'message' that u do not make any move on the mkt unless u r deemed good. Haizzz, so much for integrity isnt it??
Best of luck always.

Moolah said...

bonny b: Err...err.. me thinking hor... which institutional investor would bother to key in a buy during the trading at last period at 33 bids lower than the last transacted price?

Issue is simple.

On Monday, one certain call warrant was in the money.

And then came the 'trading error'.

And many thanks to the error, that call warrant is out of money and the call warrant taked some 20% yesterday.

Trading error?

Moolah said...

taked = tanked.

Oops. there you go... I too have fat fingers.


random said...

i hope u don have drbhicom-ce


Moolah said...

random: Out of all person, I never expect you would make such a reply. I am rather disappointed.


Can't you see that this was an issue that traders hate to see. That price change on Monday had permanently damaged their trade. One closing day and what was a winning trade became a permanent loss.

Traders don't like to see this cos it's cheating.

Yes... finally traders have something that they hate to see.

And what about investors? What do investors hate to see? What was that stock again? Trading at a 7x current pe taken private despite the company riding on a 20% growth. Now the company was relisted again. But based on 25x current pe.

Think about these events happening around the stock exchange.

You do care about what's happening, yes?

random said...


obviously I was being sarcastic because its a blatant manipulation. Blaming fat fingers for a 3 mil stock order? C'mon.. they think ppl stupid meh

as for mr ak companies, I have no interest because its obvious he thinks ppl are stupid ; playing this list relist merry go round. And best part is ppl are loving it..

Moolah said...

You know that I have been saying way too often that many are in the market just to make money and they don't care about anything else.

In trading, you do not want to see the trade you are in hampered with price fixing.

In investing, you do not want to see the majority shareholders come out with an underhand stroke that will put all the minorities at a disadvantage.

Both have the same consequences. Traders and the minorities will be short changed.

Now do you want a CLEAN stock exchange?


I hope so.