Tue, Jun 28, 2005 - Page 1 News List

Trader's extra zeros on share purchase cause TAIEX jump


Brokerage Fubon Securities Co (富邦證券) yesterday said a trader mistakenly bought shares worth over NT$7 billion (US$223.5 million), causing a sudden jump on the benchmark TAIEX.

"Unfamiliar with the new trading system, a nervous trader in our company placed a wrong order on a basket of stocks for an overseas customer," said Victor Kung (龔天行), spokesman for Financial Holding Co (富邦金控), in a statement filed with the Taiwan Stock Exchange Corp. He did not reveal the firm's client.

But Chinese-language media reported that the trader made the mistake when placing orders for Merrill Lynch & Co, which placed shares worth NT$80 million which was mistaken for NT$8 billion by the trader.

The trader, unnamed, will be fired, Kung said in the statement.

Fubon Securities is a brokerage unit of the nation's second-largest financial holding company.

In a later statement, the brokerage said it had already sold back around NT$1 billion worth of shares on the market yesterday and it would continue to sell the rest to reduce losses as much as possible.

Fubon Securities declined to comment on a media estimate of NT$600 million in losses, saying it is still calculating its losses from the trade, a company official told the Taipei Times under condition of anonymity.

But the brokerage stressed that the erroneous transaction would only have a limited impact on the stock market, as most of the 300 affected stocks were small-cap equities.

The transaction caused the broader TAIEX to leap 57.63 points, or 0.92 percent, to 6342.45 points between 11:38am and 11:41am, according to the Taiwan Stock Exchange Corp. Turnover was NT$9.41 billion during the 3- minute period.

The index retreated later after the mistake was uncovered. The index ended 0.6 percent lower, to close at 6302.99 points, yesterday.

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