The "Oolong Finger" event that once shocked the world welcomes the latest progress!
The latest news shows that Citigroup has just been fined 61.6 million pounds, equivalent to about 570 million yuan, by British regulators.
The reason for this punishment is that a London employee of the company's "own dragon finger" transaction led to a "flash crash" of European stock markets in 2022. At that time, the market value of European stock markets evaporated by 300 billion euros, equivalent to about 2.36 trillion yuan, in only five minutes.
"Oolong Finger" Trading Punished
On May 22 local time, the Financial Conduct Authority (FCA) disclosed a ticket, which attracted market attention.
On the same day, FCA issued a statement on its official website, saying that on May 2, 2022, a trader of Citigroup in London intended to sell a basket of stocks worth $58 million, but made an input error when entering the order, resulting in the creation of a basket of stocks worth $444 billion.
Citi's internal control did prevent some transactions, but not all. Some European exchanges had sold about $1.4 billion worth of shares before traders cancelled their orders.
According to media reports, this mistake (Oolong) triggered a five minute sell-off of the OMX Stockholm 30 Index and spread to major exchanges from Paris to Warsaw, which once led to a market value evaporation of up to 300 billion euros, equivalent to about 2.36 trillion yuan.
FCA pointed out in its latest statement that Citigroup's system design was flawed and the real-time monitoring mechanism was "invalid", which led to the passing of wrong transactions. Citigroup did not raise any objection to the findings of the regulators and agreed to settle the charges.
FCA fined Citigroup £ 27.77 million for the error, and the UK Prudential Supervision Authority fined the institution £ 33.88 million.
Sam Woods, the vice president in charge of prudential regulation in the UK and CEO of the Prudential Regulation Authority, said: "The companies involved in the transaction must have effective control measures to manage the risks involved. Citigroup failed to meet our expected standards in this field, leading to today's fines."
Steve Smart, the joint executive director of FCA law enforcement and market supervision, said: "FCA hopes that companies engaged in trading activities, including those using algorithmic trading, will have effective systems and control measures to prevent such errors."
Citigroup said in a statement: "We are very happy to solve this problem more than two years ago, which is caused by a personal error found and corrected within a few minutes. We immediately take measures to strengthen our system and control, and continue to work to ensure full compliance with regulations."
Five minute evaporation 2.36 trillion yuan
Back on May 2, 2022, all major European stock markets staged a shocking scene in the session.
At the opening of the day, Sweden's OMX Stockholm 30 index fell by 1%. At about 10 a.m. Central European time on May 2, 2022, Sweden's OMX Stockholm 30 index suddenly fell rapidly. The decline of the stock index expanded to 8% in just five minutes, and then recovered most of the decline in a few minutes. Finally, Sweden's OMX Stockholm 30 index fell 1.87%, leaving a long shadow.
On the same day, other European stock markets were also brought down, and all exchanges from Paris to Warsaw were in chaos. Finland's OMX all index fell by more than 6%, France's CAC 40 index and Italy's FTSE MIB index fell by more than 3% during the day, the Stoxx 600 index fell by nearly 3%, and the stock markets of Norway, Iceland and Denmark also plunged. The market value of European stock markets once evaporated by 300 billion euros, equivalent to about 2.36 trillion yuan.
As of the close of the day, France's CAC40 index fell 1.66%, Italy's FTSE MIB index fell 1.63%, and Finland's OMX All Index fell 1.31%.
A spokesman for the Nasdaq Stockholm Stock Exchange said at the time that this was not a technical problem. The spokesman of the exchange said: "Our first priority is to eliminate technical problems in the system, and our second priority is to eliminate external attacks on our system. We now exclude both of these factors. We are very clear that the reason for this move in the market is that market participants have carried out very significant transactions."
Also known as "fat finger", it is a term in stock trading. It refers to events such as traders, traders, shareholders, etc. who accidentally hit the wrong price, quantity, trading direction, etc. In the rapidly changing financial market, the phenomenon of "Oolong Finger" will appear from time to time.
On February 13 this year, the stock price of lithography giant Asma plummeted in the first few minutes and then rebounded rapidly. Traders blamed the unexpected plunge on wrong trading. According to a number of stock traders, the wrong trading, known as the "Oolong Finger", may be the reason for the initial collapse of 7.1% of Asma.
On November 18, 2021, in the secondary market, Huaxia Bank Suddenly, there was a purchase order of nearly 60000 hands, and the stock price was then pulled close to the limit, and then fell sharply. The market has different opinions on the reasons for the sudden rise of Huaxia Bank. Some investors believe that the move may be that some investors have "misspelled the stock code", and the original goal may be Shaanxi Black Cat Its stock code is 601015, while the stock code of Huaxia Bank is 600015, which is only one digit different.
In 2020, Citibank operators "slipped" and transferred $900 million to the creditors of Revlon, a cosmetics company. As the loan agency of Revlon, Citibank is responsible for the loan repayment and management of the company. At that time, Citibank remitted the loan interest of about $8 million that should have been paid to the lender of Revlon. However, due to operational errors, Citibank remitted more than 100 times the amount that should be remitted, up to $900 million. It was only one day later that it found that the account was transferred incorrectly.
In June 2015, a junior trader in the foreign exchange department of Deutsche Bank paid $6 billion to a hedge fund customer due to wrong operation. Fortunately, the bank recovered the huge amount the next day after the transaction. According to insiders, when the "Black Dragon Finger" incident occurred, traders should have handled the "net value", but the result was a "total amount", resulting in "many zeros" in the final amount. At the time of the incident, the trader's supervisor was on leave.
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Editor in charge: He Junxi
