Several European stock markets suffered a “flash crash” on Monday morning following sales orders from Citigroup Inc.,
according to people familiar with the matter.
Trading was temporarily halted in several markets after major stock indices plunged for a few minutes just before 10 a.m. Central European time. Equities in the Nordic region were hardest hit, although other European equities also fell briefly on a day when stock prices around the world fell.
Nasdaq and Euronext NV, which operates exchanges across the region, said they are investigating the cause. Nasdaq said they have seen no reason to cancel trades.
The nature and extent of sales to the Citi Group were not immediately clear. Citi declined to comment.
Investors believed the incident may have been caused by human error, known in industry parlance as a “thick finger”[ads1];.
Sweden’s benchmark index, OMX Stockholm All-Share, fell almost 8% before it largely picked up again. Denmark’s corresponding index fell over 6% around the same time and also recovered for the most part. Both closed down around 2%.
The markets operated by Amsterdam-based Euronext also fell before they largely recovered. The Dutch AEX index fell 3% and Belgium’s BEL20 fell over 5%. France’s CAC40 fell 3%. These indices ended the day down more than 1%.
Euronext suspended trading to try to reduce its impact on markets, according to a spokesman. Nasdaq said that they used circuit breakers immediately after the crash of large shares on Nordic stock exchanges, including Kone Oyj and Stora Enso Oyj.
Fat finger actions can be costly. In 2009, an oil trader on a bender placed around $ 520 million in crude oil trades, giving his company a $ 10 million loss. In 2012, the financial services company Knight Capital lost $ 440 million from a data trading error that went into millions of trades in less than an hour.
Citigroup C 1.10%
has a history of untimely mistakes. In 2020, it was ordered by regulators to clean up systems intended to protect the bank and its customers and fined $ 400 million. It spends billions of dollars on transforming technology and its internal functions, a cost that makes investors anxious. CEO Jane Fraser has said that it is the bank’s highest priority to get it right.
The latest fall came in August 2020, when Citigroup bankers accidentally paid bondholders to client Revlon Inc..
almost $ 900 million.
On Monday, the Citigroup share rose fractionally in New York to 48.48 dollars.
Write to Anna Hirtenstein at email@example.com and David Benoit at David.Benoit@wsj.com
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