As soon as Charies Comiskey saw what was happening, he turned off his machines. It was still early in the New York trading day on Oct. 15, and investors were already shifting billions of dollars into U.S. government bonds as global markets from Asia to Europe buckled. Because prices were rising and yields falling so rapidly, Comiskey, the head Treasury dealer at Bank of Nova Scotia, realized that he ran the risk of being stuck with losses or unwanted inventory if his computers automatically generated quotes to buy and sell. "Once we recognized things started getting out of control, we shut it off immediately," he says. For about half an hour he executed client orders individually over the phone. "It was a very high-stress, very fearful trade," says Comiskey, whose firm is one of 22 primary dealers that trade government bonds directly with the Federal Reserve. "It was like turning the clocks back to pre-electronic trading" in the 1990s.
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