Citigroup Inc. said its London trading desk was responsible for a flash crash in Europe that sent stocks tumbling across the continent after a sudden 8% drop in Swedish stocks.
“One of our traders made an error when inputting a transaction this morning,” the New York-based bank said in an emailed statement late Monday. “Within minutes, we had identified and corrected the error.”
According to a person familiar with the situation who asked not to be identified because he or she was discussing non-public information, Citigroup is in talks with regulators and exchanges about the incident.
A five-minute selloff in the OMX Stockholm 30 Index wreaked havoc on bourses from Paris to Warsaw, knocking the main European index down by as much as 3% and wiping out 300 billion euros ($315 billion) at one point.
Nasdaq Stockholm’s spokesman said the brief drop wasn’t due to a technical glitch on the exchange’s part. “Our first priority was to rule out any technical problems with our systems, and our second priority was to rule out any external attacks.” Nasdaq Stockholm spokesman David Augustsson said, “We have now excluded both.”
“It is very clear to us that a very significant transaction made by a market participant is the cause of this market move,” he said.
The OMX Stockholm 30 Index fell 1.9 percent, roughly in line with European stock markets. It had dropped as much as 8% in just five minutes before quickly recouping most of its losses.
Citi may suffer financial and reputational harm as a result of the error, as Nasdaq has stated that it will not cancel any trades made on the Nordic markets.
Despite safeguards, equity markets can be very sensitive to erroneous trades, according to Joakim Bornold, savings economist at Soderberg & Partners.
