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Citigroup takes responsibility for ‘flash crash’ that wiped €300bn off stocks – The Telegraph

Written by Amanda

Citigroup takes responsibility for ‘flash crash’ that wiped €300bn off stocks  The Telegraph

Citigroup has admitted that its London trading desk was behind a “flash crash” that sent shares across Europe tumbling on Monday. 

The Wall Street giant said one of its traders made a mistake “inputting a transaction” that triggered a knee-jerk selloff in Swedish stocks, wiping out as much as €300bn (£251bn) in a matter of minutes.  

The bank said it identified the error “within minutes” and corrected it, but the mistake will come as a fresh blow to Citi which has spent years attempting to improve its financial controls.  

Jane Fraser, the Scottish native who became the first woman to run a Wall Street bank when she took over in September 2020, has ordered thousands of employees to focus on improving Citi’s risk and controls systems. 

A flash crash is an extremely sharp fall in asset prices and is often caused by a trading mistake.

Citi has a history of gaffes and in 2020 blamed human error on the fact it wired almost $900m (£719m) to a group of hedge funds instead of an interest payment of less than $8m.  

A US judge ruled that the bank could not recover hundreds of millions of dollars sent by mistake in what he called “a banking error of perhaps unprecedented nature and magnitude”.

Citi is in talks with regulators and exchanges about Monday’s incident, Bloomberg reported.

On Monday, Nasdaq Stockholm said a single sell-side order was behind the sharp drop rather than a technical glitch on its part.

A spokesman said: “The reason for the drop was a sell event by a market participant. We have not identified any disturbances in Nasdaq’s systems.

“Furthermore, after a review, Nasdaq has not seen any reason to cancel trades that were made during this event.” 

Sweden’s OMX Stockholm 30 Index closed down nearly 2pc on Monday, roughly in line with a drop in European markets. 

It had fallen as much as 8pc in just five minutes before recovering most of the losses shortly after.

Other bourses, including those in Denmark, Norway, Germany, Italy and France, also slumped but later recovered.

Source: telegraph.co.uk

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Amanda

Hi there, I am Amanda and I work as an editor at impactinvesting.ai;  if you are interested in my services, please reach me at amanda.impactinvesting.ai

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