Barclays stocks suffer mini flash crash

Shares in Barclays, one of the UK’s most prominent stocks, plunged 10% at the opening bell on 14 April and then recovered, triggering a trading halt and an auction process to sort out the messy activity.

Reasons for the sharp drop and subsequent rebound couldn’t immediately be ascertained, though a trading error was a possible cause, according to market participants.

“I have absolutely no idea what drove the move—it seemed very odd,” said Joe Dickerson, a banking analyst at Jefferies who follows Barclays.

A Barclays spokeswoman declined to comment.

The London Stock Exchange halted trading in Barclays shares under its rules to ensure an orderly market. An auction followed allowing investors to place orders to find the price that reflected the aggregate of buy and sell orders. That process, while unusual, applies to the biggest FTSE 100 stocks if they unexpectedly move up or down 3% or more.

At the open, Barclay’s stock fell 10% to £1.68, equivalent to about $2.31. It is currently trading at around £1.86, near its previous close.

The Barclays mini “flash crash” comes as investors are paying close attention to wild swings in blue-chip stocks. The GameStop phenomenon, and then the meltdown of Archegos Capital Management, heightened risks of unexpected moves.

Some market participants speculated that a so-called fat finger involving a trader placing an order at the incorrect price or in the wrong size caused the Barclays’ sudden move, a view supported by the quick rebound in the price and an absence of similar volatility in other shares.

While relatively uncommon, these mistakes can prove costly. In the case of the Barclays trade, one stock-option trader said that any loss was likely minimised because of the relatively small trading volumes at the lower prices.

According to the trader, 48,000 shares of Barclays stock traded at the intraday low of £1.68, compared with 25 million Barclays shares that had changed hands by midmorning UK time.

Around 1.2 million shares traded below £1.80 and 96,000 below £1.70, the trader said. The bulk of the trades at the open were executed at about £1.82, the trader said.

Barclays is one of the UK’s largest banks, with a market capitalization of around £32bn. It has an investment banking operation in the US, as well as a prominent credit card business.

—Joe Wallace contributed to this article.

Write to Ben Dummett at [email protected] and Simon Clark at [email protected]

This article was published by Dow Jones NEWSPLUS

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