Stock Groups

Europe’s stock market fall triggered by Citi trader error


Citigroup stated that it was able to identify the source of the flash crashes and correct the problem “within minutes.”

Jim Dyson | Getty Images News | Getty Images

Investors were alarmed by Monday’s “flash crash”, when several European indexes plunged sharply. This was on Monday, a day that saw trading thin because of public holidays all around the globe.

After some European stocks suddenly dropped, trading was briefly halted on several markets at 8:05 a.m. London Time Monday.

Nordic shares suffered the most, while Sweden’s Stockholm was hardest hit. OMX 30The share index dropped as low as 8% once, and then recovered the majority of that loss to end the session with a 1.9% drop.

For a short time, other European markets were also affected.

U.S. bank giant CitigroupOn Monday, the Flash Crash Investigation Team took over responsibility.

On Monday, one our traders committed an error in entering a transaction. Citi spokesperson told CNBC that they identified and fixed the problem within minutes.

European markets closedMonday’s session was sharply down as investors responded to the flash crash by consuming weak economic data from China and Germany.

The pan-European Stoxx 600 tradedOn Tuesday afternoon, the market participants monitored key international interest rate decisions and saw a slight drop in prices.

What’s a flash-crash?

A flash crash is an extreme fall in price followed by rapid recovery the next day.

They typically take place over a few minutes and are often caused by a trading mistake or a so-called “fat finger” error — when someone presses the wrong computer key to input data.

Recent years have seen a lot of flash crashes caused by high-frequency traders firms.

In January 2020Navinder Singh Sarao, a high-frequency futures trading professional was sentenced for one year in home detention after he helped to cause a $1 trillion stock market crash 10 years earlier.

Sarao was charged by the U.S. Justice Department, accused of wire fraud, commodities fraud and manipulation, as well as a count of “spoofing” — when a trader places thousands of buy offers with the intent of immediately canceling or changing them before execution.

Sarao could profit from the momentum created by sudden market activity.

To tighten regulation following 2008’s financial crisis, the U.S. made “spoofing,” a criminal offense in 2010.