This page has been archived and commenting is disabled.
Japan Stunned After Biggest Ever, $617 Billion "Fat Finger" Trading Error Slams Stocks
A few days ago, Bloomberg had a fascinating profile of the person, pardon degenerate Pachinko gambler, who goes under the name CIS, and who is the "mystery man who moves the Japanese market." In a nutshell, CIS, a momentum day trader and living proof of survivorship bias in finance (because for every CIS who has, allegedly, made it some 999,999 have failed) has amassed a fortune that he says now exceeds 16 billion yen after having traded 1.7 trillion yen in his career, generating an after tax profit of 6 billion yen in 2013 alone. Of course, the numbers are likely wildly fabricated for pageview purposes becuase as Bloomberg itself admits, "CIS didn’t offer a complete accounting of his investing returns and his wealth for this story, and some of his claims can’t be verified."
That said, it is indeed the case that Japan has increasingly become a cartoon market in which while days can go by without a single trade taking place in its rigged bond market, where the BOJ has soaked up all the liquidity, when it comes to equities, it has become a free for all for "Mr. Watanabes" who have never taken finance, accounting or economics, but who know all about heatmaps and chasing momentum, and as a result, in a rising market/tide environment, have all grown ridiculously rich.
The problem, of course, is that what some may call a market is anything but, and has become a fragile playground for a few technicians who move massive sums of money from Point A to Point B, hoping to outsmart the few remaining others, while in the process earning the rents that the BOJ is eagerly handing out by injecting liquidity at a pace that dwarfs what the Fed did for the past 2 years. The other problem is that it is a merely of time before everything crashes into a pile of smoldering rubble thanks to the unprecedented fragility that is now embedded in every market, although most likely in Japan first.
Which leads us to what just happened in Japan when as Bloomberg reports, stock orders amounting to a whopping $617 billion (yes Bilion with a B) or more than the size of Sweden’s economy, were canceled in Japan earlier today, for reasons unknown although the early culprit is that this was one of the biggest trading errors of all time.
Of course, since this trade was noted, and DKed, one can assume that a major whale was on the losing end of the trade: recall that this is precisely what happened to Goldman time and again, when some errant algo caused the firm to lose millions on several occasions in 2012 and 2013.
There is one tiny difference: this time it was not Goldman, and the total amount was not a few paltry million but over half a trillion dollars!
From Bloomberg:
At 9:25 a.m. Tokyo time, orders for shares in 42 companies totaling 67.78 trillion yen ($617 billion) were canceled, according to data compiled by Bloomberg from the Japan Securities Dealers Association. A representative at the organization wasn’t immediately available to comment.
The biggest order was for 1.96 billion shares of Toyota Motor Corp., or 57 percent of outstanding shares at the world’s biggest carmaker, for 12.68 trillion yen through an off-exchange transaction. Toyota declined to comment. Other stocks with scrapped transactions included Honda Motor Co. (7267), Canon Inc., Sony Corp. and Nomura Holdings Inc.
“Fat finger” trading mistakes occur periodically. In 2009, UBS AG mistakenly ordered 3 trillion yen of Capcom Co. convertible bonds. Still, today’s scrapped trades were of a different magnitude.
“I’ve never heard of orders this big being canceled before,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which oversees about $474 billion in assets. “There must have been an error.”
While no harm’s been done because the orders were canceled, there should be an explanation to alleviate concerns, Sera said.
“It’s not rocket science that there was a fat finger here, but it reopens the question about accountability,” said Gavin Parry, managing director at Hong Kong-based brokerage Parry International Trading Ltd.
It may not be rocket science, but one wonders: just who has the potential to trade over half a trillion in market orders, let alone screw it up? Is it the Pachinko gambler... or the central bank itself screwing up its market orders? And just how much longer before such recurring incidents, whether in Japan or the US or Europe, force everyone to finally realize that the market is an HFT-rigged, central bank-manipulated and, now, completely broken casino.
Actually, judging by retail participation in the recent "bull market"...
... the answer is: it already has.
»
- 34427 reads
- Printer-friendly version
- Send to friend
- advertisements -
a HFT firm that did some quote stuffing and forgot to pull the offers after 1 micro millisecond?
So why are the order pulled?
Can I call the stockmarkted whenever I did a mistake to pull the transactions?
Yeah.... I just lost 5K on SLV, can you pull that back because I only planned to buy 5$ worth of SLV... you know what... just cancel the lot...
WTF????
Is it really the middle finger that's fat or is it some other finger? Or could it be a fat head mistaken for a finger?
There’s a simple way to avoid any Fat Fingers and Fat Toes – amputation. ;-)
Looney
"is it the Pachinko gambler... or the central bank itself"
that is the question ....
another alternative to consider ... it could be the work of ISIS
there were rumours earlier on of a couple of ISIS operatives, from the clandestine Philippines branch seemed determined to break into the Japanese stock markets.
these were real smart genius guys (from Chechen region the harvard of terrrorist as Armstrong called them)
further it seems they had broken into Armstrong computer model built back in 80s ... Now, who knows what these guys might be able to do next ...
dupe
Fat Finger, my Ass.
.....no problem, comin' right up!
Think of the dates you could get with a finger like this...
Easy pick-ups and scores at the supermarket, bar, and even church!
Maybe it's the PTB that pulled the floor on all stocks/buy orders, to await the steep inevidable crash that comes when all buyers suddenly disappear.
Maybe it's part of the plan.
....DESPERATE GOVERNMENTS ON THE MOVE...
USSA bombing Syria at Will
Japan HFT Fat Finger
Drahgi/Germany? to buy Greek & Cypriot Junk Bonds,
Russia building Missile defence along its Southern Borders
Turkey Military build up on Syrian border
CIA induced Hong Kong protests
Cats, and dogs, living together!
Let me offe a software fix:
If trade > 100 billion yen then get humans before completing.
No, man, that would mess with all the "liquidity" they're providing.
... otherwise known as price discovery.
or... price inculcation
Same as it ever was. This is a trading site, on that note it appears that junk government bonds are getting bought big time again < shocker >.
Let me be clear, interest rates must remain low, it's still a "debt is money" system. Again, watch the supply lines...
it's not a finger, it's their dick
in every one else ass.
may feel like a finger, but it's a dick. 100%
The Chinese are experiencing protests in Hong Kong possibly with outside influence (who would do such a thing?) and the Chinese have trained a lot of hackers, Could these be connected?
If below is not a clear indication of this whole thing being orchestrated by outside influence than pne must be very naive.
http://www.bbc.com/news/world-asia-29424753
For conclusive proof, just follow the money.
Protestors in HK coming down with a virus. Hmmmmm, yeah it is natural causes. Hmmmmm, mosquito virus comes to Florida, yeah, it is just natural causes. Hmmmmmm, Ebola comes to Texas. Hmmmmm, just natural causes.Oh, they didn't know a cluster of nuclear power plants shouldn't be located on a major fault right near the ocean. Who could have possibly predicted natural causes could have caused such a disaster? Who could have known bombing, financially and socially ruining other countries could have caused them to not understand we did it to help them?
I'll do anything to get government to save me. I'll agree to be herded, quarantined, vaccinated, taxed, look the other way when we start another cold war. I won't complain when the cabal can't keep the world economy humming anymore if the gov. will just make sure I can eat. I'll even eat whatever they give me. Please, please, I'll obey if you just SAVE ME!
Coming soon to stock markets near you. Right after Ebola hemorrhagic fever.
I fail to understand this "canceling orders" that another party agreed to fill at the price requested, i.e. how a free market functions. Regardless if the party that entered the order did it erronously or not, they are still contractually obligated unless both parties agree, and not some whiney little bitch crying to the exchange that they didn't want to enter in the order. They really need to stop this horseshit of canceling errounous orders, and firms will become more diligent on their QA.
Free markets?!?!?!?!
You just haven't seen the new official definition of "free markets". Just search though the thousands of pages of United States Codes. I'm sure you will find the official definition there.
I worked on wall St for 32 years ,I had a standing order on my desk ,no trades broken and don't ask ever to break any ...you eat it .....I could never still trade in this enviorment where your forced to break a trade .I have a bid out bad news comes out and I own it it trades lower ,I;m hooked same on the upside you have a offer and a good news comes out I just sold too cheap .....this breaking sucks and hurts the market itself
Relax, he canceled all this orders because decided it was smarter to invest in bitcoin!, 3000$ here we come!
Order != trade. If you follow the link to the Bloomberg story, it says, "They were canceled before they could be executed." So no one had hit these orders, no contractual obligations existed, and no trades were busted. That's a completely different situation than some of the earlier stories we've seen here, which, yeah, are rubbish.
For real. I'm betting Randolph and Mortimor wished that they could operate in this kind of environment. Do overs for richies and too bad so sad for average traders. Par for the course with everything else going on in this country lately. It will continue until the people have had enough I suppose.
It'll be 'REAL' money soon, then we'll all be in the shit.
you mean gold?
That's one hell of a fat algo...
What the hell is freakin IT doing? They promised this would never happen again!
This is what happens when you spend all night with hookers and blow....and leave the nerdy geek in charge.
We hate to do this....but you're gonna have to pay for the hookers and blow out of pocket. Let this be a lesson to you.
What the hell is/was freakin IT doing?
When the little geeks should have digesting
fairytales like the Sorcerer's Apprentice, they
were already learning to program.
Don't denigrate the nerdy geeks, they need hookers and blow too. Or at least Jolt and cold pizza.
lost in translation
BTFD!
Sowry, we cancered your order.
So solly.....can we get a mulligan over here?
Ho Ri Shit!
murrigan, fixed it for ya
IM SO SOLLY!!
http://www.youtube.com/watch?v=OYFy4R8BxiM
Crying is a pretty big freakin deal over there....as in you don't do it.....ever.
Maybe during the day. Get a few beers into a salaryman at night and try to stop him from crying.
You need to get out more, partner ;)
Rui-katsu:
Boehner would never fit in.
the boj will buy moar than that eventually
This is not one entity. It's multiple.
"Sell Ali" is not "Sell All".
What ever happened to, "A card laid is a card played?"
They mostly went insane, were trying to get rid of some rif raf so the real queen can take a stab at the real thing, but until then you'll just have keep trying to tie that knot.
No need to panic, thee are appropriate controls in place. Its not like we can bankrupt a whole country because of a finger.
Or a thumb for that matter, I got a pistol on mine.
Eat your heart out, GOOG repetitive-ramp-trading algo! This is how the big boys play. Enter an order to buy the entire stock market and then yell "Just kidding!"
I call 'Do-Over'!! http://www.sadtrombone.com/?play=true
These must be automated trading programs, but how any program or order can be executed without some limit for allowable execution value is beyond me. Who would release a program that can trade all your money (and then some apparently) without asking for a confirmation or permission?
They can't involve human oversite as humans can't make milisecond decisions.
I understand they can't involve human oversight in general, but how can you have a computer system capable of making 600 billion dollars worth of orders on its own prerogative? What is this? War Games with Matthew Broderick?
How? Well for starters, all animals are created equal, it's just that some animals are "more equal" than others...
"force everyone to finally realize that the market is an HFT-rigged, central bank-manipulated and, now, completely broken casino."
It doesn't matter as long as the key players are making money.
So no one lost any money at all. OK then what's the problem? lol
It was just a drill to test if the circuit breakers were working or not.
Next they will test the Fire alrams.
Just to make sure that when it crashes and burns, there are no survivors.
"Whoaaaa!!!! Im trippin out watchin HFT algos duuuuude!!!
"Whoaaaa!!!! Im trippin out watchin HFT algos duuuuude!!!
Mello man!
http://www.youtube.com/watch?v=HlYsIrusMB4
$50 bucks says the Smails kid picks his nose with that finger
ANOTHER $50 sez he eats it.
$50 says he flings it across the room or at that back of someone's head.
Dang it got beat.
The fakery is being exposed...daily.
Hey that's not just a fat finger, that's a smelly fish finger too!
"It's good to be the King."
Burger King, “Trade it your way.”
it's bad to be the piss boy
Especially when the elite are getting sloopy drunk and can't aim straight.
ok, that last chart...yesterday ZH said retail was piling into US stock market...now you put up that chart that says retail is pulling out at record pace...come on ZH...make up your damn mind.
Looks like retail handed their cash to the institutions.... better charts Tyler pls
Was it a mistake, wrong button, for a USD/JPY trade?
Skynet, Colossus and Guardian system check.
"Warn: There is another system"
"Warn: There is another system"
Unrigged and contained...absolutely!
http://olduvai.ca
I Kid. I Kid.
We should be concerned that so many traders are in this market so deep and trading on margin. For a long time I have been trying to develop a scenario for a market "super crash" and a reasonable map that would arrive at such a situation. Below you will find more on why this scenario could happen. We know that can't happen because circuit breakers have been put in place to arrest panic style moves, but imagine a market that falls, trade is halted, and the market simply does not reopen for days, or even weeks.
http://brucewilds.blogspot.com/2013/01/flash-crash-on-steroids.html
Or ever again Bruce.
Like the Harare bourse.
I'm guessing that they were buy orders?
To Really Screw Up... you need a Computer...
have that sign hanging on the Wall... :) since the Seventies..
I've been holding some mining stocks that I would like to have cancelled.
He should harakiri his finger.
“My house is under water? I didn’t mean to live here. Where am I? REDO!! Gimme my money back.”
Holy cow, Lenny, look at that, a half a billion dollar trade!
Wow, I see it too boss. That's like almost a $1000 to a central banker, right?
mistakes of half a trillion, would never happen- could never happen, much like the half trillion in money markets pulled in 08 (no I don't mean like "pull bldg 7") and yet our congress FBI and SEC cannot trace that order..but they can cancel this "error"..sit back and listen to the fat finger mistake - sure and who has equity for 1/2 a trillion bucks?- ZH says a central bank, I agree. no justice no markets "somebody has got to go to jail"
Do read the Bloomberg article. It's not Knight Capital: the orders got pulled, not filled. No money changed hands. No one has to go to jail -- though I expect more than one person will be getting the sack.
waddell & reed ?
Pardon me for asking, I'm not a day trader, but - if you make a mistake and lose money, you get to call your broker and get a "do-over"? Cool!! I'm going to get a trading account right away!
Blue Horseshoe loves Anacott Steel
Teldar Paper...get everyone you know it in today!
India Oats. Horses love it.
Exit door wasn't big enough for one fat finger let alone millions of traders.
Please do not worry...
Fat finger?
No, not at all
It is just TESTING what is to come
If you want to offload you need real buyers, not Algo circle jerk.
Government/central bank is real buyer
They are buying with the sum equity of their slaves (even if it is the future equity or future slaves). "Slave" defined as "those who require debt to finance their lives".
with fingers like that, he must get alot of second dates
With that much money at his disposal, he should not have to care to work that hard just for a 2nd date
It is definitely from picking his nose and flicking it.
Other countries try to emulate the level of fin crime in the U.S., but can't.
Rats don't have fat finger problems
https://www.adafruit.com/blog/2014/09/30/rattraders-watch-these-rats-tra...
have you noticed ?
It is a MIDDLE finger
That be a central banker's beta software implementation; connected to infinite fiat on the one side to major index stocks on the other.
"Unknown" traders"? Just like those "unknown ISIS terrorists" that are selling oil in the Mideast and "unknown drug dealers" moving mountains of coke.
The bullshit is getting so thick we all need cast iron hipwaders to walk down the street.
WHat consequences does a fat finger of this size have on the real economy?
Do they cut off the hands of all traders?
That would be one big thumbs down to casino finance!
What does this number compared to daily aggregate of stock cancellation in the US 'market'?
As kramer told Seinfeld once, "Jerry, don't worry about it, it's just a write off for them". Just wondering, did their selling hit their own stops? Mrs. Wantanabe call your broker immediately!
www.traderzoo.mobi
write it off what?
Amazing - that was Jerry's exact response in the episode.
www.traderzoo.mobi
you don't know what a write off is
Japan is just 'the wire' for China. The 'play' was up in 1989. It was a big year. The grifters have moved on. Reminds me of Detroit.
"...this time it was not Goldman, and the total amount was not a few paltry million but over half a trillion dollars..."
The 'mistake' could have been the amount of money. Perhaps his computer was slow and, getting impatient, he typed another '0' or two and hastily hit the submit button before realizing that he multiplied his investment by 10 or 100. I did this myself once - and quickly cancelled.
that was isis. it was a test of their system to flood the world with naked shorts.......using goldman servers.
This was but a small Dragon King . Wait till the big ones show up .
See http://andreswhy.blogspot.com/2013/11/dragon-kings.html
BTFF - Buy the F'n Finger
(but don't smell it)
My money was on 'hackers' but that bet was mysteriously cancelled.
Outsourced Indian QA.
Now we know what happened to Kim Jong-un. He's a trader in Japan.