Japan Stock Glitch Results In $617 Billion In Wrong Orders

Japan Stock Glitch Results In $617 Billion In Wrong Orders
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An article from Bloomerg is reporting that Japan’s OTC stock exchange was received $617 billion of erroneous stock orders for shares of many of Asia’s biggest corporations on Wednesday, September 1st. The orders were, however, all canceled before they were executed.

Details on Wednesday’s Japan stock glitch

Apparently, over 40 requests to buy or sell shares totaling 67.78 trillion yen ($617 billion) were cancelled at 9:25 a.m. in Tokyo shortly after the orders were placed, based on data from the Japan Securities Dealers Association. According to a JSDA official who prefers to remain anonymous, the association received an error report about the Japan stock glitch and is trying to confirm exactly what happened.

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Bloomberg notes the largest erroneous order was for 1.96 billion shares of Toyota Motor Corp (ADR) (NYSE:TM) (TYO:7203)., which represents 57% of the firm’s outstanding shares , for 12.68 trillion yen. Toyota had no comment at this time. Honda Motor Co Ltd (ADR) (NYSE:HMC) (TYO:7267), Canon Inc (ADR) (NYSE:CAJ) (TYO:7751), Sony Corp (ADR) (NYSE:SNE) (TYO:6758) and Nomura Holdings, Inc. (ADR) (NYSE:NMR) (TYO:8604) also saw large orders cancelled on Wednesday morning.

Japan stock glitch: Statements from analysts

“I’ve never heard of orders this big being canceled before,” commented Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., “There must have been an error.”

“I don’t think the order could’ve been executed,” noted Sumiyo Yamamoto, vice president at Jefferies Japan Ltd. “With OTC trades, you can cancel anytime during market hours. Also, the amount was huge, so someone would’ve noticed before the market closed.”

“I don’t think we can find out who did this,” Yamamoto continued. “OTC transactions happen directly between two parties, which makes it difficult to find out who was involved. But considering the scale of the error, I guess it was a big broker.”

Gavin Parry, managing director at Parry International Trading Ltd., pointed out: “It’s not rocket science that there was a fat finger here, but it reopens the question about accountability. There is a probability a broker mistook the number of shares for the value of shares. We guess that’s why the OTC market sees big crosses –- it’s easier to cancel errors.”

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