Friday, 7 May 2010

Fat Fingers On Wall Street

Every so often, you're watching a market, when out of nowhere comes a back (or a lay) that takes out a slew of prices and offers huge value as a lay (or back). The famous 'fat-finger' that slips or backs the wrong side, or thinks he's in a different market. I've done the latter myself. I'm watching a game, get bored and switch to a different market altogether, then see something on the TV that makes me think a bet is in order and I put the back in on the wrong market.

Anyway, usually these mistakes aren't catastrophic, the last time it happened to me I ended up with a nice win although I had to wait a day for it, but someone on Wall Street today apparently made a similar mistake of somewhat more consequence when he/she entered a sell order for $16 billion worth of futures instead of 'only' $16 million.

Shares of Accenture, a company I am coincidentally quite familiar with having worked for the past couple of years alongside several of their employees, saw their share price drop from $42.17 on Wednesday to 4 cents for a brief moment (a value buy), and Proctor and Gamble, a company I am coincidentally quite familiar with having used their soap during my last shower a few days ago, saw their usually stable price drop almost 37% (another value buy).

I'm not sure of the details, but you get the gist. Exciting stuff as the Dow Jones Industrial Index dropped almost 10% in less than 30 minutes, possibly as bot after bot kicked in before the market rallied and ended the day 'only' 3.2% down.

In another parallel with the betting industry, some of the trades during this time will be canceled due to the financial markets equivalent of the bookies 'palpabale error' rule.

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