Jap trader makes $1bln error
Discussion
www.bloomberg.com/apps/news?pid=10000080&sid=aFE5Aocsxerg&refer=asia
Shares of Osaka-based J-Com, which made their debut today on the Tokyo Stock Exchange's board for start-ups, fell to a limit low of 572,000 yen when an order to sell 600,000 shares at that price was made, according to data compiled by Bloomberg. The shares then jumped to a limit high of 772,000 yen.
Nikko Cordial Corp., whose Nikko Citigroup Ltd. unit arranged the share sale, said in a statement distributed at the Tokyo Stock Exchange that it isn't facing a ``massive'' trading loss from J-Com. In the IPO, J-Com sold 2,800 at 610,000 yen a piece. The company has 15,000 shares outstanding, according to Bloomberg data.
OUCH !!!! That's gotta smart 
I can't believe the exchange let trading carry on.
Shares of Osaka-based J-Com, which made their debut today on the Tokyo Stock Exchange's board for start-ups, fell to a limit low of 572,000 yen when an order to sell 600,000 shares at that price was made, according to data compiled by Bloomberg. The shares then jumped to a limit high of 772,000 yen.
Nikko Cordial Corp., whose Nikko Citigroup Ltd. unit arranged the share sale, said in a statement distributed at the Tokyo Stock Exchange that it isn't facing a ``massive'' trading loss from J-Com. In the IPO, J-Com sold 2,800 at 610,000 yen a piece. The company has 15,000 shares outstanding, according to Bloomberg data.
OUCH !!!! That's gotta smart I can't believe the exchange let trading carry on.
I love this quote...
Dec. 8 (Bloomberg) -- A $2.8 billion trading error threw a
$14 million initial share sale by Japanese telecommunications outsourcing company J-Com Co. into disarray, driving brokerage and bank stocks lower.
``We are aware that an order that is hard to comprehend has been placed,'' said Tomoharu Nakao, a manager at the Tokyo Stock Exchange.
Dec. 8 (Bloomberg) -- A $2.8 billion trading error threw a
$14 million initial share sale by Japanese telecommunications outsourcing company J-Com Co. into disarray, driving brokerage and bank stocks lower.
``We are aware that an order that is hard to comprehend has been placed,'' said Tomoharu Nakao, a manager at the Tokyo Stock Exchange.
chim_knee said:
I'm not a trader so forgive me if this is a stupid question, but how come their trade capture system didn't have a "WTF" setting and prevent the trade from being made?
They normally do. We do, but as it was a new issue I guess they were either in a hurry and just double clicked it, or the static data that check price differences might have been wrong.
All in all , a mother of all f*** ups.
shadytree said:Apparently, someone's compiled a "contemporary" dictionary (i.e. "new" words) and has included "ohnomoment" - the moment at which you realise you've sent a text, for example, to the wrong person.
All in all , a mother of all f*** ups.
Personally, I think we have the new definition of an "ohnomoment"!! or maybe an "oh
moment" shadytree said:
I'm not a trader so forgive me if this is a stupid question, but how come their trade capture system didn't have a "WTF" setting and prevent the trade from being made?
They normally do. We do, but as it was a new issue I guess they were either in a hurry and just double clicked it, or the static data that check price differences might have been wrong.
All in all , a mother of all f*** ups.
Or someone pressed the override button :0-
dazren said:
Eh?
I assume you mean they'll get Honda Preludes...with leather!
"Zero Sum Gain". On the one side of the transaction you have the seller underselling an asset, on the other side you have the purchaser buying at undervalue, ie having it right off.
DAZ
Ah. My bad.
Basically the stock went into an auction limit down and everyone in teh market saw this and though, blimey they're cheap Ill have some there.
So the stock open down 30% , the rest of the maket bought it and then it went back to teh correct level.
Here's a Bloomberg graph of what happened:
Dec. 8 (Bloomberg) -- Mizuho Securities Co., a brokerage
unit of Japan's second-largest bank by assets, said it was
responsible for an erroneous order to sell 40 times more shares
in J-Com Co. than the company has outstanding.
Shares of J-Com fell by the 15 percent limit to 572,000 yen
in the first 30 minutes of trade on their Tokyo Stock Exchange
debut after a trader offered so sell about 600,000 shares at
that price or less, data compiled by Bloomberg shows. The Osaka-
based telecommunications company sold just 2,800 shares in its
initial public offering, and has 14,000 outstanding.
``We deeply regret having caused such a big problem,''
Mizuho Securities said. ``We are investigating what happened,
and discussing with the exchange how to handle the issue.''
J-Com shares valued at 421 billion yen ($3.5 billion)
changed hands, making the stock the most active by value on the
Tokyo exchange. J-Com's market value is 11.2 billion yen, based
on the closing price of 772,000 yen. The company sold its shares
at 610,000 yen in the IPO.
Mizuho Financial's shares fell 31,000 yen, or 3.4 percent,
to 890,000 yen in Tokyo.
`Incredible'
``What happened is quite incredible,'' said Tsuyoshi Segawa,
an equity strategist at Shinko Securities Co. ``It could cause a
tremendous amount of damage given how many shares were traded.''
The error echoes a similar mistake on Nov. 30, 2001, when
UBS AG mistakenly sold 610,000 shares in Dentsu Inc. for 16 yen
a piece on the company's debut. UBS had helped sell the
company's shares at 420,000 yen in the IPO.
UBS sold 65,699 shares before canceling the order,
according to information obtained from the stock exchange's
trading system, and was able to buy back 18,339 shares. That
meant the bank needed to buy back 47,360 shares over the next
three trading days to deliver stock sold that it didn't own.
A Tokyo Stock Exchange spokesman, Toru Onoda, declined to
comment on Mizuho's role, citing a confidentiality agreement.
Last month the exchange, the world's second-largest by the
market value of its traded companies, was forced to half trading
in equities for the first time after its computer system failed.
So the stock open down 30% , the rest of the maket bought it and then it went back to teh correct level.
Here's a Bloomberg graph of what happened:
Dec. 8 (Bloomberg) -- Mizuho Securities Co., a brokerage
unit of Japan's second-largest bank by assets, said it was
responsible for an erroneous order to sell 40 times more shares
in J-Com Co. than the company has outstanding.
Shares of J-Com fell by the 15 percent limit to 572,000 yen
in the first 30 minutes of trade on their Tokyo Stock Exchange
debut after a trader offered so sell about 600,000 shares at
that price or less, data compiled by Bloomberg shows. The Osaka-
based telecommunications company sold just 2,800 shares in its
initial public offering, and has 14,000 outstanding.
``We deeply regret having caused such a big problem,''
Mizuho Securities said. ``We are investigating what happened,
and discussing with the exchange how to handle the issue.''
J-Com shares valued at 421 billion yen ($3.5 billion)
changed hands, making the stock the most active by value on the
Tokyo exchange. J-Com's market value is 11.2 billion yen, based
on the closing price of 772,000 yen. The company sold its shares
at 610,000 yen in the IPO.
Mizuho Financial's shares fell 31,000 yen, or 3.4 percent,
to 890,000 yen in Tokyo.
`Incredible'
``What happened is quite incredible,'' said Tsuyoshi Segawa,
an equity strategist at Shinko Securities Co. ``It could cause a
tremendous amount of damage given how many shares were traded.''
The error echoes a similar mistake on Nov. 30, 2001, when
UBS AG mistakenly sold 610,000 shares in Dentsu Inc. for 16 yen
a piece on the company's debut. UBS had helped sell the
company's shares at 420,000 yen in the IPO.
UBS sold 65,699 shares before canceling the order,
according to information obtained from the stock exchange's
trading system, and was able to buy back 18,339 shares. That
meant the bank needed to buy back 47,360 shares over the next
three trading days to deliver stock sold that it didn't own.
A Tokyo Stock Exchange spokesman, Toru Onoda, declined to
comment on Mizuho's role, citing a confidentiality agreement.
Last month the exchange, the world's second-largest by the
market value of its traded companies, was forced to half trading
in equities for the first time after its computer system failed.
chim_knee said:
Apparently, someone's compiled a "contemporary" dictionary (i.e. "new" words) and has included "ohnomoment" - the moment at which you realise you've sent a text, for example, to the wrong person.
My friend had one of these moments. God knows what possessed her, but she was mucking around with her sixteen year old daughter's phone, writing a text with words to the effect of, "I really fancy you and I want to lick you all over." She then pressed send by accident and it got sent to a female school friend. The next day her daughter apologised to her friend and told her that her mother had written it. I said, "Oh dear. I guess you gave parent's evening a miss that year."
EmmaP said:
My friend had one of these moments. God knows what possessed her, but she was mucking around with her sixteen year old daughter's phone, writing a text with words to the effect of, "I really fancy you and I want to lick you all over." She then pressed send by accident and it got sent to a female school friend. The next day her daughter apologised to her friend and told her that her mother had written it. I said, "Oh dear. I guess you gave parent's evening a miss that year."
I had one of those incidents once, bloody texts, I was sending one to my girlfriend at the time, ahem of a most romantic and intimate nature, I accidentally sent it to one of my work colleagues.......... got a text back 5 mins later along the lines of "Not really my scene mate, besides shouldn't you be asking your Mrs for this sort of thing" next day in work was hell, the text was still doing the rounds for days after....bastids!
speedy_thrills said:
…<Said a load of stuff>…
Yep, Mizuho have to buy the shares back within three days, so they can deliver the stock to the buyers.
Otherwise they will get 'bought in'. Exchange will enforce a buyback 'at market'. (I think that's the case in Japan?)
Basically they're
It's crazy that the exchange didn't halt trading and cancel the trades. Surely it's obvious it's a 'Fat Finger'
Much smaller errors like this happen occasionally in the UK. The LSE is very quick to spot it and sort any mess out. Obviously not anywhere near this sort of scale.
We had this once here in Germany a couple of years ago. I can't remember at what bank it was but there was a junior trader entering a huge volume into the trading system thinking he was in the simulation environment, oops. Trading in the share was suspended for the day and the deal got reversed by the exchange, phew.
>> Edited by hansgerd on Thursday 8th December 12:39
>> Edited by hansgerd on Thursday 8th December 12:39
hansgerd said:
We had this once here in Germany a couple of years ago. I can't remember at what bank it was but there was a junior trader entering a huge volume into the trading system thinking he was in the simulation environment, oops. Trading in the share was suspended for the day and the deal got reversed by the exchange, phew.
>> Edited by hansgerd on Thursday 8th December 12:39
How long ago ? Cause I worked in Frankfurt in'96 and did something like that
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