04 September 2015

ABN Amro penalised over fat finger client trading error

26 February 2013  |  5217 views  |  0 Graph 4

ABN Amro has been slapped with a Skr300,000 fine by Nasdaq OMX Stockholm after mistakenly trying to buy 70% of the issued share capital of industrial outfit SKF following a fat fingered trading error by a sponsored access client.

The ABN Amro client had the intention of posting a sell order for 5000 SKF B shares at a price of Skr149. However, due to an input error by the client, the order volume field was populated with a negative value (i.e. -5,000).

Instead of returning an error, the ABN Amro platform placed an order for 294.9 million shares, corresponding to more than 70% of the outstanding SKF B shares. The sell order resulted in execution of 813,442 shares.

Sponsored access has been a target for regulators concerned about the potential for significant market disturbances caused by erroneous client order entry.

The Nordic Member Rules demand that broker members ensure tight oversight of client orders to prevent trading mishaps.

In levying the fine, Nasdaq OMX says: "The incident itself shows that ABN Amro did not have the technical and administrative arrangements in order to hinder the order from being placed, thus causing market disturbance."

In a statement e-mailed to Finextra, ABN Amro accepted responsibility for the incident. "We have since worked closely with both Nasdaq OMX, as well as other parties in the infrastructure chain, to ensure that this kind of client order issue cannot occur again," says the bank. "Market integrity and market risk mitigation are constant objectives for ABN Amro Clearing Bank."

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