Bob Pisani is off; this post was written by CNBC producer Robert Hum.
UPDATE — The Nasdaq issued the following statement:
“Progress Energy Inc. (NYSE: PGN) was halted today at 12:57:42 and resumed trading at 13:02:50. The NYSE-listed stock was trading on The NASDAQ Stock Market when an inaccurate limit price was entered by a trading firm. No trades were routed to other market centers. Approximately 57 trades have been cancelled."
Progress Energy was halted for 5 minutes due to single-stock circuit breaker rules at 12:57pm ET. But were those circuit breaker rules completely effective? Perhaps there are still some flaws in the system…let’s take a look at what happened this afternoon, in a situation the markets haven’t seen in previous single stock circuit breaker halts.
Remember, per the circuit breaker rules, if a stock moves 10% or more within 5 minutes, trading of that stock is halted for 5 minutes across all markets.
At 12:57:21, Progress Energy traded at $44.60. In theory, trading should have been halted if a trade was executed below $40.14 (10% below $44.60) with 5 minutes.
21 seconds later, at 12:57:42, Progress Energy broke below $40.14. However, in subsequent MILLI-seconds, dozens of trades were still being executed well below $40. Most of the trades occurred on the Nasdaq, with multiple trades occurring at $39, $38…then $34, $33, $32, $31, and $30…before 6 even lower-priced trades occurred (1 trade each at $29.75, $27.00, $22.00 followed by 3 trades at $4.57).