Boeing shares drop before NYSE, Nasdaq cancel trades

NYSE Euronext and Nasdaq OMX Group Inc. canceled trades that briefly sent shares of Boeing Co., the aircraft maker that's one of thirty Dow Jones Industrial Average stocks, down 44 percent this morning.

The errant orders sent Chicago-based Boeing down to $38.77 at 7:14 a.m. New York time today from $68.77 at the end of last week, with 800 shares changing hands on NYSE Arca and 200 on Nasdaq. They fetched $68.50 in the next trade, at 8:06 a.m., and were at $67.30 as of 4 p.m.

While U.S. stock exchanges have implemented curbs to help prevent swings in the price of individual companies from causing another crash like the May 6 rout, they only apply after 9:45 a.m. New York time. Companies such as Accenture Plc, which now trades for $39.72, fell to 1 cent on May 6 as U.S. stocks lost $862 billion in value in less than 20 minutes.

"The bigger issue is making sure investors feel the market is safe for them to invest," said Brett Mock, chairman of the Security Traders Association, a trade group based in Darien, Connecticut. "Obviously they need to make sure there's uniform standards across the markets."

The Securities and Exchange Commission is testing a program through December that pauses trading for 5 minutes in Standard & Poor's 500 Index companies, including Boeing, when their stock rises or falls 10 percent or more in less than 5 minutes after 9:45 a.m. New York time. Building on the circuit-breaker test, U.S. exchanges offered rules this month to standardize the process for canceling clearly erroneous stock trades.

Boeing spokesman Charles Bickers confirmed that the trades were canceled and said he had no other information at the time. Nasdaq OMX spokesman Robert Madden didn't immediately respond to phone calls or e-mails requesting comment.

"We've been discussing the subject of circuit breakers with the SEC, and those discussions are ongoing," NYSE Euronext spokesman Ray Pellecchia said in an interview. "The clearly erroneous rules have been revised, so that's the next thing the SEC is considering."

Three equity orders that pushed Washington Post Co. shares up 99 percent in less than one second on June 16 showed why the SEC began the program this month to halt stocks during times of volatility. Trades totaling 766 shares at $919.18 or $929.18 crossed on NYSE Euronext's NYSE Arca platform at 3:07:30 p.m. in New York that day, data compiled by Bloomberg show. The stock changed hands for $462.84 prior to the jump. The orders were later canceled.

The Dow Jones Industrial Average plunged almost 1,000 points on May 6. A May 18 report from the SEC and Commodity Futures Trading Commission gave six potential causes of the crash, including trading curbs that applied only at the New York Stock Exchange. Halts "will help reduce the likelihood of this type of unusual trading activity from recurring," SEC Chairman Mary Schapiro said on June 2.