SGX says 'fat finger' not to blame after Jardine Matheson briefly lost US$41 billion in market value

SGX says 'fat finger' not to blame after Jardine Matheson briefly lost US$41 billion in market value

SGX file
People work in an office at the Singapore Exchange (SGX) on July 27, 2016. (File photo: AFP/Roslan Rahman)

SINGAPORE: No "fat finger" error was involved when the share price of conglomerate Jardine Matheson Holdings plunged briefly on Thursday (Jan 24), wiping out US$41 billion in market value, Singapore's stock market regulator said.

Traders had speculated that the stunning 83 per cent tumble could have been caused by a keyboard mistake in which a finger hits two keys simultaneously, noting the stock's quick rebound.

But the Singapore Exchange (SGX) said its regulatory body had reviewed the transactions and found no basis to cancel the trades.

The plunge came after sell orders overwhelmed bids before the opening session, it said in an emailed statement.

"Trading was orderly and there was no sign of manipulation," SGX said.

"We have also ascertained that the orders were not due to fat finger errors or any malfunctioning systems on the part of the participants."

On Thursday, Jardine Matheson shares tanked just before regular trading opened, with 167,500 shares changing hands at US$10.99, down sharply from Wednesday's close of US$66.47.

The shares quickly rebounded, however, and the losses were recouped as Jardine Matheson ended the day 0.53 percent higher at US$66.82.

"Obviously, it looks like a fat finger trade and the seller is bound to have informed the exchange and requested it to cancel the trade. Given the huge price difference, normally such trades are cancelled," said one local trader before SGX released its findings.

Jardine Matheson also said it believed the decline was caused by an "an electronic trading error", before the SGX statement was released.

The Jardine group has businesses in a wide range of sectors, including motor vehicles, luxury hotels, property development, financial services and food retailing.

Fat finger blunders involving billions of dollars are not new in the market.

Bloomberg reported in April 2018 that German lender Deutsche Bank accidentally transferred €28 billion (US$35 billion) to one of its outside accounts.

In October 2014 hundreds of billions of dollars worth of stock orders in some of Japan's biggest firms had to be cancelled, possibly the result of a "fat finger" error.

Source: Agencies/ga/ec(aj)

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