$600 Billion 'Fat Finger' Causes Deals Worth More Than Sweden's Economy To Be Cancelled
from the whoops dept
Techdirt has written before about so-called “fat finger” errors in the world of finance, where traders mistype and end up buying or selling huge quantities of stocks, often causing major losses to their employers. The London Evening Standard has a new fat finger story, but one with a couple of interesting twists:
Share trades worth more than the size of Sweden?s economy had to be cancelled in Tokyo today after what is believed to be the biggest ?fat finger? error on record.
It is thought to be the most extreme example of a trader in financial markets inputting hopelessly wrong figures while working under intense pressure. The identity of the trader is not yet known.
Orders for shares in 42 major Japanese companies, including household names such as Toyota, Honda, Canon and Sony, totalling 67.78?trillion yen (?381?billion [$600 billion]), were overturned, according to the Japan Securities Dealers Association.
Naturally, the most striking feature of this particular fat finger is its size: $600 billion, bigger than Sweden’s economy ($552 billion). The second unusual aspect is that this error cancelled sales by mistake, rather than make them. That was fortunate for the company concerned, since it probably limited the damage caused.
But even more than for the cases we’ve written about in the past, the fact that a single trader was able to make a mistake on this extraordinary scale, and that the system did not block or even query it in any way, suggests that the trading software is appallingly designed and the management dangerously lax. The fear has to be that, without robust systems in place to stop such actions, one day a fat finger might not simply cause a company to lose a big chunk of money, but take out an entire country’s economy — or even trigger the meltdown of the world’s financial system.