13 February 2016

HFT firm's faulty algo blamed for oil price surge

26 August 2010  |  9529 views  |  0 graph 2

High-frequency trading firm Infinium Capital Management is at the centre of an investigation by CME Group into whether a $1 surge in oil prices earlier this year was the result of one of its algos going haywire.

According to Reuters, citing sources and documents, the firm's brand new trading program malfunctioned on 3 February, racking up a million dollar loss in around one second just before markets closed on the New York Mercantile Exchange.

The computer code error is thought to explain a sudden $1 surge in prices in less than a minute before they then fell more than $5 over the next two days.

CME Group and the Commodity Futures Trading Commission have been investigating the issue since and civil charges may be brought, says Reuters, although both refused to comment.

In a statement given to the Financial Times, Infinium chief executive Chuck Whitman says the surge was "a result of human error in a software test group and the parties associated with this error are no longer with the firm".

Whitman says software architecture has now been changed to prevent a repeat of the "inadvertent error".

The case again highlights the controversial and increasingly important role played by high-frequency traders and complex computer algorithms in markets. They have been heavily implicated in the 6 May flash crash that saw a dizzying plunge in the Dow Jones Industrial Average and regulators are currently considering various curbs.

In January, The New York Stock Exchange fined Credit Suisse Securities $150,000 for failing to control development of an algorithm that went awry and flooded the Exchange trading system with hundreds of thousands of erroneous orders.

Firm faces civil charges for oil trading mayhem - Reuters

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board, sign up now.

Related stories

18 August, 2010
12 August, 2010
11 August, 2010
15 July, 2010
20 April, 2010
07 April, 2010
15 February, 2010
12 February, 2010
14 January, 2010
13 January, 2010
17 November, 2009
26 August, 2009
21 July, 2009

Related company news


Top topics

Most viewed Most shared
UK sets out open banking API frameworkUK sets out open banking API framework
15352 views comments | 100 tweets | 89 linkedin
Deutsche Bank calls for co-operation with fintech firms on B2B servicesDeutsche Bank calls for co-operation with...
8378 views comments | 28 tweets | 30 linkedin
How to accelerate your fintech startupHow to accelerate your fintech startup
7982 views comments | 34 tweets | 9 linkedin
Is Paym a failure?Is Paym a failure?
6759 views 16 comments | 23 tweets | 16 linkedin
Visa issues API to offer consumer control over card transactionsVisa issues API to offer consumer control...
6241 views comments | 17 tweets | 28 linkedin

Featured job

£100,000 basic, £180,000 OTE + Benefits

Find your next job