What happened?
Photo: Spencer Platt/Getty Images On March 18, a weird thing happened at the New York Stock Exchange. It was near the end of trading for the day, one minute before the closing bell had rung, when the price of Shopify’s stock went haywire, shooting up about $100 per share to $780 before immediately crashing down again in post-market trading. There was no sudden revelation about the business that would have caused it to jump. Wall Street was confused. Reddit was baffled.
That’s what NYSE management is trying to find out, and they’ve launched an investigation into the matter, according to sources familiar with the probe. At the center of it appears to be Citadel Securities, a trading firm owned by billionaire Ken Griffin, which was ultimately holding the shares when trading ended that day.
On March 18, however, Citigroup had an order from its Wall Street clients to buy 600,000 shares of Shopify, a block so big it could cause prices to wobble in the open market. So the bank split it up — a standard way for brokers to handle large trades. The first trade for half the order was put in before 3 p.m., giving Citadel over an hour heads up to find sellers. The second half of that was put in about ten minutes before the close of trading.
NYSE rules restrict the number of new orders that can be brought in during the final minutes of trade. Normally, Citadel would alert other brokers of a large imbalance and see if there was any interest from hedge funds or day traders who would want to sell their holdings of Shopify on the market. Instead, Citadel decided not to. . That sent the price of the shares rocketing up about 13 percent in the final minute of trading, before immediately tumbling down in after-hours trading.
The trades have set off a blame game on Wall Street. It’s not clear who the end buyer — or buyers — were, but the immediate losses would have been in the ballpark of about $18 million in the immediate aftermath of the spike. Others are questioning why Citadel Securities didn’t try to fill the order before the last minute and if they stood to profit off the rapid increase in price. Another person I spoke with said it was Citigroup’s fault for putting in the order at the last minute.
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