A “big toe mistake” by a London-based Citigroup trader that caused a rapid drop in European stock markets could cost the bank at least $ 50 million (£ 39.8 million).
The trader was working from home last month when they incorrectly added an additional zero to a trade, Bloomberg reported, citing “people familiar with the matter.”
This error of a split second, on the holiday of May 2, wreaked havoc on markets across Europe, causing a sale that reportedly ended up with up to 300 billion euros (256,000 million pounds) at any given time.
Trading was briefly suspended in several markets that morning after major stock indices fell sharply.
One of the hardest hit was Sweden’s OMX Stockholm 30 benchmark index, which fell by almost 8% but then recovered most of its losses and ended the day 1.9% lower.
The Stoxx Europe 600 index of Europe’s major stocks lost up 3% before closing 1.5%.
Although the mistake was made by a London-based trader, the UK stock market escaped the butcher shop that day as it was closed for holidays.
Flash crashes or brief price collapses can be caused by human error. Although many aspects of commerce have been digitized and automated, parts of the process are still manual, leaving room for this error. So-called big-finger errors, where the details of a trade are misspelled, have become more common with the rise of high-frequency trading companies.
So far no one was able to send in the perfect solution, which is not strange. New York-based Citigroup acknowledged the mistake in a statement a few hours later, saying: “This morning one of our merchants made a mistake in entering a transaction. Within minutes we identified the error and corrected it. “.
Bloomberg has discovered more since then. He reported that the bank could record a loss of at least $ 50 million after the incident, although work is still being done on this and the final figure may be higher.
He said the trader was part of the company’s Delta One business unit in London and had since been fired while the bank was reviewing the incident.
UK regulators are likely to have taken an interest, and the fact that the trader worked from home may be a focus of any investigation.
However, the report quoted privileged people as saying that Citigroup considered it a human error unrelated to staff working from home.
The Delta One unit sells financial products to sophisticated investors, such as pension funds, hedge funds, and top-tier corporate clients.
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Citigroup has a past form. In 2020 he accidentally sent $ 900 million of his own money to the creditors of the Revlon cosmetics group.
On May 6, 2010, the Wall Street Dow Jones lost nearly 9% of its value in minutes, and hundreds of billions of dollars were wiped out of stock prices.
A Citigroup spokesman declined to comment.