Fat Finger Trade: Broker could have lost Rs 200-250 crore over 'fat finger' trade on NSE! скачать в хорошем качестве

Fat Finger Trade: Broker could have lost Rs 200-250 crore over 'fat finger' trade on NSE!

This video is in Hindi and covers the following topics: Fat Finger Trade: Broker could have lost Rs 200-250 crore over 'fat finger' trade on NSE! NSE Broker को Fat Finger Trade की वजह से 200-250 करोड़ का नुक्सान It is an erroneous trade due to punching a wrong key on the keyboard or clicking the mouse at wrong place. For example a trader sells one lakh shares at Rs 1,010 while the market price is Rs 1,100. The result is loss of Rs 90 lakhs. So it can be a huge loss for the initiator, and windfall gains for others. How do such trades get fixed? Some broking houses and exchanges have in-house system or filters to catch and stop such trades. Some exchanges annul such trades with a warning. Parties involved in such trades settle it among themselves too. If taken insurance can help too. A 'fat finger' trade, hit the NSE's derivatives segment late on Thursday that could have caused a loss of Rs 200-250 crore to an unknown broking house which placed the order. This makes it the biggest such trading mistake in India. Rs 60 crore loss an Emkay Global Trader caused in Oct 2012 in Nifty contracts. It also led to a near 15% drop in the Nifty index, but failed to trigger a market-wide circuit breaker On Thursday, between 2.37pm and 2 39pm, a trader sold 25,000 lots of Nifty call options at 14,500 strike at prices as low as Re 0.15. When this trade was put into the exchange, the Nifty was hovering at 16,600 level. The market price for this contract was about Rs 2,100. The trader then had to square off its trade after realizing the mistake and, therefore, he bought back the sold quantity at a much higher price of Rs2,100. This resulted in a sudden price drop and rise in the Nifty Call options of 14,500 strike in a matter of minutes from Rs2,100 to 15 paise and then back to Rs2,100. Each lot of Nifty contract is for 50 numbers. So the estimated total loss is between Rs 200 crore and Rs 250 crore, market players said (that is, 25,000 x 50 x Rs 2,000 = Rs 250 crore). Market players said that at least two Kolkata-based brokers made windfall gains from the incident, with one richer by Rs 50 crore and the other by Rs 25 crore Officially, NSE has not commented on the issue. But, according to an exchange official, since it was between brokers, there was a likelihood that the trader who put the erroneous order had insurance and the loss would be covered $600 billion inflated order for blue-chips in 2014 at a Japanese exchange. $28 billion wrong transfers into several accounts in 2018 at Deutsche Bank. In 2007, Gold futures in New York saw a spike in volume and the Gold futures, subsequently, fell 1.6% on Comex, which was said to have been due to a mistaken trade of 18,149 lots instead of 18,149 ounces.  Another incident in the Philippines led to 40% plunge in airlines' share after one erroneously entered a sell order at a low price of 58 pesos against 98 pesos. Citigroup Inc could record losses of more than $50 million after a London-based employee's fat-finger trade caused a flash crash in European stocks last month Market players were scrambling for answers as to how such trades, with prices so far off from the ruling market level at that time, could hit the exchange's trading engine. Officials at broking houses said that after the 2012 fat finger fiasco on the NSE, several broking houses had installed in-house systems to detect and kill such trades even before they could be transmitted to the exchange. A recent media report said that to neutralise fat finger trades from hitting its trading engine, the NSE was to put an alert system for trades that were at a substantial premium or discount to the market price. However, on Thursday, no such system had kicked in, an investment adviser said As it happens after such incidents, conspiracy theories also started doing the rounds. According to a Kolkata-based trader, it could have been a set-up trade between two parties where one had to take losses in their books, so the other party helped the first one out. India's biggest stock exchange has cautioned stock brokers against executing orders which appear to be non-genuine, leading to deviation in the normal price discovery process. Vardhaman Global Sharecom Pvt Ltd has written a letter to market regulator Securities and Exchange Board of India (SEBI), the National Stock Exchange (NSE) and NSE Clearing Ltd to ‘look into’ a punching error (called fat finger trade in trade lingo)   Vardhaman Global’s letter explains what the problem was: “Client had a position of 12,86,350 PE of expiry 2nd June which they were trying to square off but due to an error 14,500 CE was sold at market. This led them to sell 1,000,000 call at market at an average price of 399.43640 instead of 2130.” Perhaps the trader was trying to sell 16,500 call options as the Nifty was trading around 16,600.