Nasdaq was forced to cancel a number of stock trades in Kraft Foods after a trading glitch caused the company’s shares to shoot up nearly 30 percent. The trading error comes just days after Kraft Foods and their former snack business Mondelez International began trading as two separate companies.
Kraft and Mondelez have recently switched their shares from the New York Stock Exchange to Nasdaq. Both companies’ shares soared as much as 28.9 percent within one minute of the opening bell on Wednesday morning. The error was spotted within an hour of the market opening. A subsequent review ruled the trades ‘erroneous’ and they were cancelled. Preliminary investigations have concluded the price hike and subsequent erroneous trades were the result of a faulty algorithm.
The error has alluded to Nasdaq’s failure to handle the Facebook public offering properly in May and a recent software error at Knight Capital which caused $440m in losses. Recently regulators have been expressing concerns about the over-reliance on technologies and potential side-effects this might have on market stability.
“Trading in Kraft was affected by a broker error that impacted multiple stock exchanges,” Nasdaq said in a statement. “Nasdaq’s systems performed normally and the industry’s process for handling these issues worked as intended.” The company has named the broker involved.
“Participants should review their trading activity for potentially erroneous trades and request adjudication through the ‘Clearly Erroneous’ process within the applicable timeframe for filing pursuant to the rule,” the statement said.