5 ms·
This reminds me of a similar error from 2005[1] where a trader mistook the "price" and "quantity" fields of the trading software. Instead of selling 1 share for
by hughes 10y ago
This reminds me of a similar error from 2005[1] where a trader mistook the "price" and "quantity" fields of the trading software. Instead of selling 1 share for 610,000 yen, 610,000 shares were sold for 1 yen.
The mistake cost around $225 million.
[1] http://www.foxnews.com/story/2005/12/09/typing-error-causes-225m-loss-at-tokyo-stock-exchange.html http://www.foxnews.com/story/2005/12/09/typing-error-causes-...
- Cyph0n 10y agoDamn that's huge. You'd assume that the software checks the dollar amount and asks for a confirmation, or better yet permission from a higher up, if it exceeds some value.
- joering2 10y agoit does ask for confirmation. As OP wrote - it was an error, NOT a mistake.
- Cyph0n 10y agoI don't see what you're getting at. The trader switched price with quantity - it was a human mistake. If the software had brought up a warning with something like "you are selling each share for less than 610000 +- 10000, please confirm", this could have been avoided.
- randyrand 10y agoWhat a silly semantic argument to make. It was an error and a mistake. In fact, error is a synonym for mistake: https://www.google.com/search?q=mistake&oq=mistake&aqs=chrome..69i57j69i60l2&sourceid=chrome&ie=UTF-8 https://www.google.com/search?q=mistake&oq=mistake&aqs=chrom...
- madeofpalk 10y agoHe actually said both :) But I don't understand the difference in this situation.
- Houshalter 10y agoThe problem with confirmation is it trains the human to always press "yes". You need a system that only activates if something really unusual or wrong.
- gertef 10y agounusual, like paying 1 billion times over recent prices?
- nxzero 10y agoA billion times over market price, funny; who in their right mind would even pay 20x over market price in any meaningful amount without requiring some sort of control?
- salgernon 10y agoSee also rm -rf
- Houshalter 10y agoYes of course. I'm just saying that usually these systems are badly designed, and recognizing errors correctly is a surprisingly hard problem. In the medical world, many people have been killed by mistakes in prescriptions, despite everything going through computers and multiple humans checking it. The problem was that the machines were too sensitive to mistakes and trained the humans to ignore warnings. They also didn't distinguish mild warnings from extreme warnings. E.g. a prescription being 2x larger than recommended, or 100x larger than recommended, which are very different situations. A well designed interface might have different shades of red for different levels of severity. To give an indication if something is really wrong.
- speeder 10y agoMy mother use computers all day, and also hates them and think they are illogical. In a way she is correct, I saw her many times freaking out at a dialog box and calling me to "fix it", and it was just some absolutely useless "warning", but I also saw her many times clicking "ok" on a important message without reading and then wondering why things broke.
- jameshart 10y agoThe transaction value is the same either way - 610,000 Yen.
- Matthias247 10y agoBut it should be able to check the current share value and then display a warning that this would be massive loss.
- pbhjpbhj 10y agoIt's more nuanced than that though isn't it - you can sell shares at a loss to push the market so you can buy and profit off the rebound (ie go short)? Kinda like losing your queen in chess in order to check-mate your opponent.
- Rexxar 10y agoThis is market manipulation and it's illegal nearly everywhere.
- patio11 10y agoIt got flagged multiple times and, each time, someone at the Tokyo Stock Exchange came to the conclusion that they didn't have the authority to countermand the order. The regulator was livid about this in the report.
- KMag 10y ago2005 was ages ago in terms of financial markets. It was before the housing crash and other financial crises (notably in Greece). It was before the flash crash and other notable electronic trading incidents. Many world equity markets now have daily up/daily down limits a certain percentage above and below the previous day's closing price. Others will pause trading for a short period of time if short-term price moves are abnormally large. Many equities markets only allow direct connections to the market from brokerages licensed by the country's financial regulators. These days, brokerages often implement their own sanity checks on many order flows. Joe's Live Bait and Stock Trading generally isn't connecting directly to any equity trading venue. I'm curious what the effect would be of a market switching to second-price blind auctions every 5 minutes if a stock moves up or down 5% on the day. There are academic papers showing theoretical stability advantages of second-price auctions. Trading at the second-highest bid when the market is down more than 5% and at the second-lowest ask when the market is up should help to attract one-sided liquidity in the direction of market stability.
- samstave 10y agoThat reminds me of the time when, in 1989, I was playing trade wars, on a bbs out of San Jose; I was attempting to corner the market on wheat in the galaxy as I had pretty much all of it... I smoked pot and instead of buying all the available wheat, I sold all I had. Ruined my monopoly on wheat....
- artursapek 10y agoA famous trader known as BNF really capitalized on this incident. http://www.bloomberg.com/news/articles/2014-09-25/mystery-man-moving-japan-made-more-than-1-million-trades http://www.bloomberg.com/news/articles/2014-09-25/mystery-ma...
- XaspR8d 10y ago> Worse still, the number of shares in Mizuho's order was 41 times the number of J-Com's outstanding shares, but the Tokyo Stock Exchange processed the order anyway. There are a lot of simultaneous errors going on here...
- kordless 10y agoFeatures, not errors.
- fiatmoney 10y agoStock exchanges really cannot be expected to track numbers of outstanding shares. One puts in a bid or an ask, indicating that one is willing to purchase or sell the given number at the given price, and an order type, indicating the manner to fulfil (fill-or-kill, limit to a certain price, take whatever outstanding offers are necessary...). This is more than enough nuance for a professional product like a stock exchange that needs to operate at microsecond cadence. If you want to validate whether an order makes sense or is a "good idea", the place to do it on the client.
- derefr 10y agoComing from a perspective of competitive multiplayer game networking, that seems insane. You can't trust the client. An ideal stock exchange, I'd think, would include the same sort of logic as a payment processor: blocking any orders that seem to be "not the sort of order this client would make", to prevent e.g. orders being executed by people who have illegitimately gained access to the account. Of course, these type of algorithms typically take far more than microseconds to run—but that's fine, as long as they take the same time for everyone.
- hueving 10y agoA stock exchange isn't responsible for tracking how much outstanding stock there is. The purpose of an exchange is just to match orders, not to determine if they are insane. Expecting otherwise would be like expecting eBay to determine that your buy it now price is too low or that you don't have enough inventory on hand to fulfill your listings.
- DanBC 10y agoThere's even a name for this - "Fat finger error". https://en.wikipedia.org/wiki/Fat-finger_error https://en.wikipedia.org/wiki/Fat-finger_error
- artursapek 10y agoI think fat finger is more like adding too many zeros, or hitting the wrong numbers on the keyboard. This incident was a UI confusion; entering correct values in the wrong inputs.
- jackgavigan 10y ago"Fat finger" has become a generic term that would encompass this type of error.