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Flash Crash: a 300 billion dollar blunder

05/05/2022 | 11:13am

Oops! The fat finger of a trader at the Citigroup trading desk in London caused a Flash Crash on Monday morning. A bad click that cost a whopping 300 billion dollars.

On Monday, in the morning of May 2, 2022, European indexes fell sharply, with declines of 4% to 8% depending on the market, without operators or observers understanding why. A technical error? The hypothesis was quickly ruled out. An attack on the systems? No, not even that. 

Well, no. Simply a human factor. "This morning, one of our traders made a mistake while placing an order for a trade," said U.S. bank Citigroup on Monday evening, noting that the error was corrected within minutes of the drop. The operator introduced by mistake a gigantic order of sale on the Stock Exchange of Stockholm, whose amount was not revealed, sparking a fall of 8 % of its index OMX, affecting all European stock markets.

Although the situation was quickly rectified, some investors were substantially hit. First of all, those who had placed stop losses, i.e. price levels at which investors had to close out their positions. It didn't take long before we imagined good old Homer Simpson as the trader!

Drawing by Amandine Victor 


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