US regulators are scrambling to deal with the aftermath of a wild day of trading on the Dow Jones Industrial Average which shipped more than 600 points in seven minutes before the close of trading in New York.
Citi is denying it, but The New York Post and WSJ are reporting rumours that a Citi trader executed a trade for $16 BILLION, instead of $16 MILLION in e-mini shares that track the perfomance of the S&P 500 index. Easy mistake to make one would think - a
few extra zeros, or a B instead of an M. Certainly one that any pre-trade risk management at the broker, and ideally at the exchange too, would pick up.
But if CME says the Citi trades didn't look unsual in light of market activity, perhaps this $16b trade was an algorithm's response to an unintended trigger elsewhere.
Some reports are pointing to the rapid drop in share price of Proctor and Gamble and 3M on NYSE and Nasdaq as the culprit that sent the algos scrambling. But I haven't seen any reports yet on what may have triggered those plunges.
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