A so-called “fat finger” trader error hit European markets on Monday.
The trading error sent markets in Denmark, Norway, Germany, Italy and France into reverse, necessitating a brief trading halt in some of those markets but Stockholm was the worst affected, with the Stockholm OMX 30 index losing 8% of its value in the first five minutes of trading.
The Swedish financial regulator is investigating the cause of the steep fall, which was caused by a mistyped transaction by the London desk of New York bank, Citi.
Citigroup said one of its traders incorrectly inputted a transaction that triggered a slew of other transactions via programmed trading.
The effect would have been magnified because a number of markets around the world were not trading as they were celebrating the May Day bank holiday.
As “flash crashes” go, this was a relatively minor one.
In May 2010, there was a “flash crash” that wiped almost US$1,000bn off the value of stocks in minutes before prices recovered while in August 2012, a technology error at US trading outfit Knight Capital caused major disruption to the trading of around 150 stocks on the New York Stock Exchange, resulting in the broker announcing a US$440mln pre-tax loss on the SNAFU.
In October 2013, a flash crash on the Singapore Stock Exchange saw some stocks lose close to nine-tenths of their value, prompting the exchange to bring in circuit-breaking regulations to prevent a recurrence.