24 July 2016
Find out more

HFT firm's faulty algo blamed for oil price surge

26 August 2010  |  9673 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)

Finextra news in your inbox

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

Related stories

Computer systems fingered in flash crash probe

Computer systems fingered in flash crash probe

12 August 2010  |  9533 views  |  0 comments
SocGen trader charged with stealing HFT code

SocGen trader charged with stealing HFT code

20 April 2010  |  8779 views  |  0 comments
SEC considers electronic tagging of high-frequency traders - WSJ

SEC considers electronic tagging of high-frequency traders - WSJ

07 April 2010  |  8261 views  |  0 comments
UBS algo trading code theft case dropped

UBS algo trading code theft case dropped

15 February 2010  |  11021 views  |  0 comments
Former Goldman programmer indicted over HFT code theft

Former Goldman programmer indicted over HFT code theft

12 February 2010  |  7702 views  |  0 comments
SEC begins overhaul of US equity markets with ban on direct market access

SEC begins overhaul of US equity markets with ban on direct market access

14 January 2010  |  10535 views  |  0 comments
Credit Suisse penalised by Nyse for algorithmic meltdown

Credit Suisse penalised by Nyse for algorithmic meltdown

13 January 2010  |  12905 views  |  0 comments
US futures markets in crosshairs of algo revolution - Tabb

US futures markets in crosshairs of algo revolution - Tabb

17 November 2009  |  6637 views  |  0 comments
Algo revival powers surge in electronic trading volumes

Algo revival powers surge in electronic trading volumes

21 July 2009  |  6974 views  |  0 comments

Related company news

 
Visit www.abe-eba.euVisit VocaLink.comFind out more

Top topics

Most viewed Most shared
MasterCard agrees £700m VocaLink acquisitionMasterCard agrees £700m VocaLink acqu...
8132 views 14 comments | 32 tweets | 37 linkedin
hands typing furiouslyWhat Every FinTech CEO Should Know About R...
7865 views 0 | 14 tweets | 8 linkedin
hands typing furiouslyBanking on IoT: Security in the Internet o...
7810 views 3 | 19 tweets | 7 linkedin
Santander doubles down on fintech fundSantander doubles down on fintech fund
7605 views comments | 22 tweets | 28 linkedin
Brexit-scarred London fintech startups enquire about moving to BerlinBrexit-scarred London fintech startups enq...
7507 views comments | 16 tweets | 16 linkedin

Featured job


Brussels (Belgium) or Paris (France)

Find your next job