Citi admits a trader error sparked a 'flash crash' that sent Swedish stocks plunging 8% and European shares tumbling
Citisaid one of its traders was behind a " flash crash" that sent Swedish stocks tumbling and knocked European shares.
- The bank said the trader made an error when inputting a transaction, and the mistake was quickly corrected.
Sweden's benchmark OMX 30 stock index crashed 7.9% in morning trading Monday before quickly rebounding, leaving investors shocked.
"On Monday, one of our traders made an error when inputting a transaction. Within minutes, we identified the error and corrected it," a Citi spokesperson said in an email Tuesday morning.
The sell-off quickly spread to other markets Monday, with shares in Germany, France, Norway and Denmark also falling sharply before rapidly recovering. The continent-wide Stoxx 600 index finished 1.5% lower on fears about the global economy.
Nasdaq Stockholm, the Nordic countries' main stock exchange, said it would not be canceling any trades from Monday, raising the prospect that the mistake could hurt Citi financially.
"Nasdaq is continuously investigating all market movements on our market places, and we have done the same in this situation," an exchange spokesperson said in a statement.
"The reason for the drop was a sell event by a market participant. We have not identified any disturbances in Nasdaq's systems."
They added: "Nasdaq has not seen any reason to cancel trades that were made during this event."
The term "flash crash" entered the financial markets lexicon in 2010 when major US stock indices plummeted before rebounding rapidly.
Stock market experts have said flash crashes can be driven by computer trading algorithms, which quickly react to price movements and exacerbate the move in one direction.
Citi in 2020 accidentally sent $900 million of its own cash to lenders of cosmetics company Revlon. It proved a hugely costly mistake, with the bank unable to recoup much of the money.
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