Fat finger mistake may have caused HK$4.8 trillion stock order in Japan
Trillions of yen worth of stock orders in some of Japan's biggest firms had to be cancelled yesterday, possibly as the result of a "fat finger" error.
Trillions of yen worth of stock orders in some of Japan's biggest firms had to be cancelled yesterday, possibly as the result of a "fat finger" error.
Over-the-counter orders were placed in the morning for shares for 67.78 trillion yen (HK$4.8 trillion) but were later cancelled, said an official at the Japan Securities Dealers Association.
The biggest order was for 1.96 billion Toyota shares, or 57 per cent of outstanding shares at the world's biggest carmaker, for 12.68 trillion yen through an off-exchange transaction. Other stocks with scrapped transactions included Honda, Canon, Sony, Nomura Holdings and Mitsubishi UFJ.
The trades had been cancelled by an unnamed association member before being placed, he added.
A "fat finger" error is a term used when transactions are placed by a dealer after mis- typing trades.
In 2009, UBS mistakenly ordered 3 trillion yen of Capcom convertible bonds. In 2005, Mizuho Financial Group's securities unit was unable to cancel a mistyped order for J-Com, costing the bank 27 billion yen. Yesterday's scrapped trades were of a far greater magnitude.
"I've never heard of orders this big being cancelled before," said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank, which oversees about US$474 billion in assets. "There must have been an error."
While no harm had been done because the orders were cancelled before completion, there should be an explanation to alleviate concerns, Sera said.
The Topix index fell 0.6 per cent to 1,318.21 at the close of trading in Tokyo. A gauge tracking brokerages slumped 1.5 per cent.
"It's not rocket science that there was a fat finger here, but it reopens the question about accountability," said Gavin Parry, managing director at Hong Kong-based brokerage Parry International Trading.
"I don't think we can find out who did this," said Sumiyo Yamamoto, vice-president at Jefferies Japan.
"[Over-the-counter] transactions happen directly between two parties, which makes it difficult to find out who was involved. But considering the scale of the error, I guess it was a big broker," he said.
