The nation’s third-largest stock yesterday tumbled almost 10 percent in minutes and lost US$3 billion of its market value due to errors made when placing orders, the Taiwan Stock Exchange said.
The apparent “fat finger” episode — in which a trader hits the wrong number on a keyboard — left Formosa Petrochemical Corp (台塑石化) down 8.23 percent to NT$106 at the close.
A spate of orders culminated in a 15.2 million-share closing auction, a trade valued at more than US$55 million, Bloomberg News said.
The stock’s average daily trading volume since September last year was about 2.9 million shares.
The TAIEX, which was up as much as 0.6 percent earlier in the day, erased all its gains at the close.
Formosa Petrochemical makes up 3.1 percent of the benchmark index.
The exchange said the brokerage responsible must apply to it to correct its error.
There have been a number of “fat finger” errors in financial markets worldwide.
In October 2014, hundreds of billions of US dollars worth of stock orders in some of Japan’s biggest firms had to be canceled, possibly because of a “fat finger” error.
In October 2015, a junior banker at Deutsche Bank AG accidentally transferred US$6 billion to a single hedge fund customer in a “fat finger” trade, according to the Financial Times.
The money was repaid the same day.
“I suspect some investors who bet on a lower index simply wanted to dump the [Formosa Petrochemical] stock to push down the broader market ahead of the settlement of March futures contracts today,” KGI Securities Co (凱基證券) analyst Phil Chu (朱有志) said.
“It could be just for trading purposes and have nothing to do with fundamentals, since other petrochemical heavyweights still moved higher,” Chu said.
In the petrochemical sector, shares in Formosa Plastics Corp (台塑) rose 1.43 percent to close at NT$106.50, and Formosa Chemicals & Fibre Corp (台灣化學纖維) gained 0.45 percent to close at NT$111.00.
Additional reporting by CNA
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