Several European stock exchanges suffered a ‘flash crash’ on Monday morning following sell orders from Citigroup Inc.,
according to people familiar with the matter.
Trading was halted momentarily in several markets after major equity indices plunged for a few minutes just before 10 a.m. Central European Time. Equities in the Nordic region were the hardest hit, although other European stocks also fell briefly on a day when stock prices around the world fell.
Nasdaq and Euronext NV, which operate stock exchanges in the region, said they were investigating the cause. The Nasdaq said it saw no reason to call off the trades.
Citigroup C 1.04%
working with exchanges to determine what happened and why, one person said.
“This morning, one of our merchants made an error while entering a transaction,” a Citigroup spokeswoman said in a statement late Monday. “Within minutes, we identified the error and fixed it.”
The nature and extent of Citigroup’s sales were not immediately clear.
Investors believed the incident may have been caused by human error, known in industry parlance as the “fat finger.”
Sweden’s benchmark, the OMX Stockholm All-Share, fell nearly 8% before rebounding broadly. Denmark’s equivalent index fell more than 6% around the same time and has also largely recovered. Both closed around 2%.
Markets managed by Amsterdam-based Euronext also fell before recovering broadly. The Dutch AEX index fell by 3% and the Belgian BEL20 by more than 5%. The French CAC40 fell by 3%. These indices ended the day down more than 1%.
Euronext has temporarily suspended trading to try to lessen the impact on markets, according to a spokesperson. The Nasdaq said it used circuit breakers immediately after the crash on major stocks on Nordic exchanges, including Kone Oyj and Stora Enso Oyj.
Trades with fat fingers can be expensive. In 2009, an oil trader on a bender placed about $520 million in crude oil trades, burdening his business with $10 million in losses. In 2012, financial services firm Knight Capital lost $440 million due to a computer trading glitch that captured millions of trades in less than an hour.
Citigroup has a history of spurious errors. In 2020, regulators ordered him to clean up systems meant to protect the bank and its customers and was fined $400 million. It is spending billions of dollars to transform its technology and inner workings, a cost that worries investors. Chief executive Jane Fraser said the bank’s top priority was to get it right.
The most recent fall came in August 2020, when Citigroup bankers accidentally paid the bondholders of client Revlon Inc..
nearly $900 million.
On Monday, Citigroup shares rose 1% to $48.71 in New York.
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Appeared in the May 3, 2022 print edition as “Citigroup Spurs ‘Flash Crash’ in European Markets”.