Fat Fingered Flash Crash, Japan Edition: Nikkei Plunge Blamed On Erroneous Sell Orders, As Panic Selling Just Does Not Exist
The latest example of selling not being actually "selling" comes courtesy of a Deutsche Bank oven mitt. Bloomberg reports that "Deutsche Bank AG sent a spate of erroneous sell orders for Japan’s Nikkei 225 Stock Average futures contracts because of a system malfunction. The erroneous orders sent stocks on the Nikkei 225 into a brief plunge seconds after the market opened at 9 a.m. The average sank as much as 1.1 percent to 9,658.44 before rebounding to about 9,743. The gauge was at 9,691.08 as of 1:54 p.m. in Tokyo." We are trying to remember when the last time that a "fat finger" was responsible for panic buying. But when every single HFT algo is programmed to only buy on no volume, the possibility of that happening is slim to none.
More from Bloomberg:
There were about 980,000 sell orders “at one point,” according to Tatsuya Kamiki, executive officer of the Osaka Securities Exchange. Orders for the contracts were placed at 9,690 yen and 9,700 yen, according to exchange data.
At the lower price, that values the orders at about 9.5 trillion yen ($104 billion), or about 3 percent of the total market value of the first section of the Tokyo Stock Exchange, according to Bloomberg data.
“There was quite a lot of disturbance in the futures market this morning,” said Masanori Ikunaga, head of domestic stocks at Sumitomo Mitsui Asset Management Co. “As the speed of orders and trades increases at the stock exchange, there will also be potential for these types of risks.”
Time for Jerome Kerviel to hire Johnny Cochran and use the fat finger excuse: if the market doesn't fit (and sells off) you must acquit. If it works for everyone else who is selling off in a hurry only to blame it on rogue programs later, surely the Frenchman can finally clear his name.