Europe’s stock exchanges COULD be hit by same tech glitch that cost U.S. trading firm $440million in just minutes, warn traders…(Bank On It!!)
3 August 2012
Europe’s top stock exchanges could be hit by a technology glitch that cost one of the New York Stock Exchange’s top firms a staggering $440million, traders have warned.
Knight Capital Group Inc said a technical glitch caused wild trading in 140 stocks as the market opened on Wednesday, forcing it to tell clients to send orders elsewhere.
It has sparked fears that Europe’s top exchanges, such as the London Stock Exchange or Deutsche Boerse, could be similarly affected.
The head of electronic trading at one of the largest European trading banks said: ‘If an algo went wrong in New York, an algo could go wrong in London or Frankfurt.
‘There’s no reason why it couldn’t happen in Europe. We have no extra controls or protection.’
Knight said the glitch occurred in its United States market-making unit, part of the business that quotes buy and sell prices on shares.
European traders pointed to the fact that market-making is more popular in the United States so its exchanges are more vulnerable to a market-making glitch than those in Europe.
Head of trading at another large European bank said: ‘The New York Stock Exchange has a handful of very large market-makers so there is concentration risk that doesn’t exist on European exchanges where market-making is less centralised.
‘That said, you can never say never and machines are trading the vast majority of European stocks and the one thing we know about machines is that they fail.’