A so-called flash crash in European stock markets on Monday was caused by a single sell order made by “mistake”, a major US bank has admitted.
As the FTSE 100 was closed in London for the bank holiday, other European stock markets suffered plummeting values, with Sweden’s OMX 30 dropping the most – by 8% – within minutes.
Citigroup said late Monday that it had acted quickly to correct the error made by one of its traders, who Bloomberg said was based in London.
“This morning, one of our traders made a mistake while entering a trade. Within minutes, we identified the error and fixed it,” the New York-based bank said in a statement.
Brokers described the event as a “flash crash” due to markets falling so sharply for no apparent reason at the time.
The event was created by an erroneous trade on a day of light trading activity, which often exacerbates such an error when automated systems take over.
Sweden’s financial watchdog said earlier it was investigating the plunge and was in contact with US operator Nasdaq, which runs Stockholm and other stock markets in the Nordic region.
The error sent the broader pan-European benchmark STOXX 600 down more than 2% before the correction was applied by Citi.