Finance Finance News History’s biggest ‘fat-finger’ trading errors

History’s biggest ‘fat-finger’ trading errors

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Overnight, a Japanese brokerage firm was forced to cancel a trading error worth $711 billion, an order with a value bigger than the Swedish economy.

Predicting financial markets is notoriously tricky, but disrupting them can be simple, all takes to send the market into meltdown in these cases is one “fat finger” pressing the wrong button.

• The fat finger mistake worth $711 billion
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Trading errors, where a broker presses the wrong button on a computer, are actually more common than we realise in the financial industry, though not all create international headlines.

So ubiquitous are trading errors, that the Australian Stockbrokers Foundation has an annual tongue in cheek award for the biggest yearly mishap.

The New Daily looks at some of the biggest trading disasters in Australia and around the world.

Japan, 2014

Japan’s stock market was flooded with accidental stock orders worth $711 billion overnight which were luckily voided before they could be executed, according to a Bloomberg report.

Orders included in the bungled transaction included 1.9 billion shares in carmaker Toyota, approximately 57 per cent of the company’s shares.

The value of the trade was on par with the $700 billion bailout for US banks after the GFC and was greater than the value of Sweden’s economy.

Banking and other financial stocks have led a fall on the Australian share market.

Japan, 2009

A Japanese branch of Swiss bank UBS mistakenly ordered 30 trillion yen of bonds from Capcm instead of the intended 30 million yen.

The order was placed out of trading hours and was thankfully discovered by the Toyko stock market straight away, avoiding heavy losses for UBS, according to a Telegraph report.

Japan, 2005

The Tokyo stock market, and later the Australian market, were plunged into chaos in 2005 when a Mizuho Securities broker tried to sell $2.9 billion worth of shares in a newly listed recruitment agency that was only worth $90 million.

According to a report by BBC, the trader mistakenly sold 610,000 shares in recruiter J-Com for 1 yen, rather than selling one share for 610,000 yen. The company only had 14,000 shares available.

The price of J-Com shares slid 100,000 yen ($875) in 30 minutes, but luckily recovered and ended the day well above their original price. The mistake cost Mizuho Securities at least 27 billion yen ($282 million).

London, 2001

A Lehman Brothers trader wiped £30 billion ($55 billion) from the share market in 2001 when he ordered shares in companies like BP that were 100 times larger than intended.

According to a report by The Guardian, the London-based trader accidentally keyed £300 million ($553 million) into his computer during a trade, instead of £3 million ($5 million).

The trade wiped-out London’s stock exchange and resulted in a £20,000 ($40,000) fine for the now-defunct Lehman Brothers.

Australian ‘fat-finger’ trades

Sydney, 2013

Sydney firm ABN AMRO was slapped with an ASIC-imposed fine of $130,000 for a fat-fingered trade when they failed to activate a computer command that checked trade limits.

The firm placed 13,000 orders in an Australian property company, or 15 per cent of the shares available.

ABN AMRO was given the tongue-in-cheek award for best operator of the year at the 2013 Australian Stockbrokers Association’s Stockbrokers Awards.

Melbourne, 2012

Melbourne brokerage firm D2MX was also forced to pay a $110,000 ASIC fine after an erroneous trade sent the price of certain BHP shares plummeting from over $9 to just 6 cents.

The company was found guilty of breaking market integrity rules by deliberately removing a safeguard filter system which prevents certain orders being place on the trading market, according to a report by The Australian.

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