Traders’ ‘fat finger’ costs $706bn

Error...An investor watches as Japan's Nikkei 225 stock market index is displayed in Tokyo. Picture: AP Source: AP

SHARE orders worth more than Sweden's entire economy had to be cancelled after the biggest 'fat finger' trade ever.

The 40 trades, worth 67.78 trillion yen ($706 billion), were cancelled in Tokyo before they could be executed, Bloomberg News reports.

The largest order was for 1.96 billion shares of Toyota, which would have been almost 60 per cent of the company. Other shares ordered in the trade included Honda, Canon, Sony and financial group Nomura.

Orders to buy stock are often cancelled, but this is believed to be the largest 'fat finger' trade ever, reports Bloomberg.

"I've never heard of orders this big being cancelled before," said Sumitomo Mitsui Trust Bank market strategist Ayako Sera, in Tokyo. "This must have been an error."

Traders are speculating over who made the massive error, which was over-the-counter, meaning just between two parties and therefore not regulated by authorities.

Major order ... The 'fat finger' trade included a request to buy almost 60 per cent of Toyota. Picture: AFP Source: AFP

Some market experts say the gigantic order probably never would have been executed without raising red flags.

"It's not rocket science that there was a 'fat finger' here, but it reopens the question about accountability," said Parry International Trading managing director Gavin Parry, who is based in Hong Kong.

"There is a probability a broker mistook the number of shares for the value of shares."

In the red ... Businessmen walk past the exchange rates in Tokyo overnight. Picture: AFP Source: AFP

'Fat finger' trades have happened before, although this is thought to be the largest one.

Swiss financial giant UBS ordered 3 trillion of bonds from a video game company by mistake in 2009.

And in 2005, a share trader at Mizuho bank mistyped an order for shares in recruitment company J-Com and cost his company 27 billion yen. In that case, he intended to sell one share at 610,000 yen, but instead sold 610,000 shares at 1 yen each. Those orders were filled — despite the fact it was 41 times the number of actual shares in the company, reports The Independent.

And American firm Knight Capital Group had to be bailed out in 2012 when its computers accidentally placed orders that cost the firm hundreds of millions in losses.

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