Flash crash set off by ‘fat-fingered’ Citigroup trader could cost $50m
A “fat-finger error” by a London-based trader at Citigroup that triggered a flash crash across European stock markets could cost the bank at least $50m (£39.8m).
The trader was working from home last month when they incorrectly added an extra zero to a trade, Bloomberg reported, quoting “people familiar with the matter”.
That split-second mistake, on the 2 May bank holiday, wreaked havoc on markets across Europe, triggering a sell-off that reportedly wiped out as much as €300bn (£256bn) at one point.
Trading was briefly suspended in several markets that morning after leading share indices recorded sudden steep declines.
One of the hardest hit was Sweden’s benchmark OMX Stockholm 30 index, which fell by nearly 8% but later recouped most of the losses and ended the day 1.9% lower.
The Stoxx Europe 600 index of Europe’s leading shares lost as much as 3% before closing down 1.5%.
Even though the error was made by a London-based trader, the UK stock market escaped that day’s carnage as it was closed for the bank holiday.
Flash crashes, or brief price collapses, can be caused by human error. Although many aspects of trading have been digitised and automated, parts of the process are still manual, leaving room for such error. So called fat-finger blunders – where the details of a trade are mistyped – have become more common with the rise of high-frequency trading firms.
Until now, few details had emerged about last month’s incident. New York-based Citigroup owned up to the mistake in a statement a few hours later, saying: “This morning one of our traders made an error when inputting a transaction. Within minutes we identified the error and corrected it.”
Bloomberg has uncovered more since. It reported that the bank may record a loss of
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