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.

Comments

[MarketTruth]

"There was quite a lot of disturbance... in the Force"

Maybe the Fed/PPT were still suffering their hangover from partying too much over the weekend?

This is not the plunge you are looking for.
Move along. Move along. ;-)

[Cognitive Dissonance]

The excuses are moving from the absurd to the sublime.........not. They're still stuck in the absurd.

On the other hand, since there hasn't been a really high volume up day in the markets since 1928, they could just be telling the truth. Which is itself a precursor to the coming market apocalypse........er, sorry, not very PC of me, the coming market problems.

[Zina]

Look at that:

http://www.abc.net.au/news/stories/2010/06/01/2915443.htm?section=world

Is that the sinkhole that will swallow the entire world economy?

[Cognitive Dissonance]

I saw that this morning. What's amazing about it is it's nearly perfect circular shape and how deep it goes. And than that ugly black nothingness at the bottom, which means the cavern below is even bigger.

I read they were saying the last time this happened, it was problems with the sewer system. Right. And I'm Tiny Tim. Take a look how deep it goes. To hell maybe. If that much dirt "sank" imagine how big the hole is that the dirt sunk into. Or maybe it's an underground river. Amazing.

Time to move the town.

[LeBalance]

Your "local" loan shark owns the world of toxic assets.  Watch him slowly move back into his perspective picture and disappear, with only a single bagholder for the universe of debt.

[nuinut]

Is gold about to give a Fat Finger to fiat?

[Kataphraktos]

The Deutsche Bank computers were only following orders.

[10044]

Omg, the ppt is spreading like the oil spill! Lol

[Borat]

Interesting that it appears that only slim fingers operate on bull markets

[morph]

980,000 * 9,700 = 9,506,000,000 = 9.506B Yen.

Unless these were 1000 bundled futures....

[docj]

Yep, this is precisely the market I want to be trading in. (/sarc)

Good luck, folks.

[plocequ1]

You know what Confucius says about Phat finger..  " One who scratches itchy ass with fat finger , Will smell like Sushi "

[King_of_simpletons]

It looks too perfectly circular to be caused by some tropical storm.

[London Dude Trader]

FWIW, I've been trading N225 futures and options for years and that market behaves very differently from US and other markets. Last night's action at the open was very weird, and it all ties in with some sort of trading error. Just my opinion.

[Sasuke]

This blogger gives an in-depth comment about the incident in his blog, but he writes in Japanese, so just take a look at the picture.

http://torashishiza.blog55.fc2.com/

And this picture which he introduces in the blog.

http://market-uploader.com/neo/src/1275350630897.jpg

[London Dude Trader]

797K + 286K size sell orders are unheard of for N225 futures. This contract's daily volume is on the order of 80K contracts during cash market hours (also, the equally liquid half-size N225 contract traded on the SGX has a daily volume of about 90K contracts during Japanese cash market hours.)

[Jessica6]

Well I'll be. A similar incident happened on India's SENSEX.

And on the same day no less. Another 'fat finger'. Why, this fat-fingered dude really gets around, doesn't he?

http://www.businessinsider.com/mini-flash-crash-freaks-everyone-out-in-i...

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