An error by a Citi operator caused the European stock markets to lose 300,000 million in minutes this Monday | Economy

File image of a Citibank branch in New York.
File image of a Citibank branch in New York.Nicolas Economou (getty images)

A mistake by a single stock trader was capable of causing a storm of 300,000 million euros in the European markets this Monday. The US bank Citi recognized on Monday night, early Tuesday morning in Spain, that one of its employees was the cause of the so-called flash crasha sudden drop in indices in a matter of minutes with an equally quick recovery afterwards.

The Reuters agency exclusively announced that Citi was behind this collapse, but the bank ended up confirming it: “This morning, one of our operators made a mistake when entering a transaction. In a matter of minutes, we identified the error and corrected it, “said the entity.

A few minutes, however, go a long way in the Stock Exchanges. The epicenter of the shock was in the Swedish Stock Exchange. The OMX index, the country’s main reference, collapsed shortly before 10 in the morning, falling 8%, with falls of more than 10% in minutes in values ​​such as the fashion firm H&M or the telecommunications company Telia.

The markets have something of the herd and a lot of the automatic. That error in the transaction of a Citi operator did not stop in Sweden. The contagion affected Stock Exchanges throughout Europe, the only ones that were open at the time. The Ibex 35, for example, lost 200 hit points, more than 2.3%. And the whole of the European Stock Exchanges left more than 300,000 million euros with that flash crash Nordic, according to Bloomberg calculations.

At the London table

The waters returned to their course. Stocks rallied quickly and were also back in a matter of minutes virtually back to where they started. Nasdaq Stockholm, the Swedish market, clarified that the crash was not due to a technical failure. Everything pointed to human error. According to unnamed financial sources cited by Bloomberg, the trader who made the mistake works at Citi’s London trading desk.

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Sharp falls in prices often automatically trigger sell orders to limit losses when certain levels are breached. The most notorious case of instantaneous collapse was that of 2010 in the United States Stock Exchange, although on that occasion the flash crash It was not triggered by an error, but by fraudulent operations, amplified by the algorithms. There were stocks that went from trading at $74 to less than a penny in a matter of minutes.

The Singapore Stock Exchange in 2013, the British pound in 2016 and the Ethereum cryptocurrency (which went from $300 to 10 cents in minutes) in 2017 have seen similar episodes of sharp drops followed by immediate recoveries.

Citi has not provided information on whether or how much its operator’s error has caused the bank to incur losses.

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