NASDAQ yesterday suffered another embarrassing glitch as the US stock exchange was forced to cancel trades in grocery firm Kraft Foods after its shares jumped 28.9 per cent in just one minute.
Although the cause of the error has not been identified, it is thought that the most likely cause was a misfiring trading algorithm.
During the one-minute period, Kraft shares surged as high as $58.54 after opening at $45.44. Later the stock closed down 1.2 per cent at $44.87.
Other minor stock exchanges followed Nasdaq’s lead and cancelled affected trades after deeming them erroneous, even though the decision risks sapping market confidence and raises new questions about the growing role of high frequency trading.
Nasdaq is still reeling from the botched Facebook IPO in May, when trading was delayed by half an hour and order confirmations were substantially delayed.
As a result of the Facebook error the exchange is facing lawsuits from banks such as UBS and has offered to set up a $62m (£38.6m) compensation fund for those affected.