• Goldman options trading glitch


    Earlier, the Financial Times reported that the NYSE was reviewing transactions in symbols beginning with "H" to "L" for the first 67 minutes of trading on NYSE's Amex platform, which includes options on equities such as JPMorgan and Kellogg. They also reported that other options exchanges, including CBOE and Nasdaq OMX, temporarily stopped accepting quotes from NYSE Amex in early morning trading and that the glitch could cost as much as $655 million.

    Goldman Sachs Puts 4 Employees On Leave After Trading

    Some of the options trading in question also occurred on ISE, according to an ISE spokeswoman, who declined to provide more details.

    Goldman Sachs' Massive Trading Error Bears A Scary

    The system, called a "trading axis," monitors the Wall Street bank's inventory to determine whether it should be a more aggressive buyer or seller in the market. But a technical error misinterpreted non-binding indications of interest, or IOIs, as firm bids and offers, leading to some trades that were vastly out of line with where market prices were, a source familiar with the matter said.

    Goldman, Knight Capital Trading Errors - Business Insider

    Goldman quickly identified the problem and contained it, said the source, who spoke on the condition of anonymity. But by then the damage had been done: Depending on how many of the trades exchanges nullified— or 8775 busted 8776 –the bank may be on the hook for anywhere from a few million to hundreds of millions of dollars, according to estimates from traders and analysts.

    Financial industry analysts have warned that investors should be careful about how they approach automated trading, following news that a trading error at Goldman Sachs cost the firm $655 million on Tuesday.

    In August last year broker Knight Capital in August last year, in which another computer error caused a loss of $995 million that forced the firm to recapitalise and seek new backers. Knight eventually merged with rival Getco four months later.

    Goldman Sachs experienced a trading glitch Tuesday that resulted in a large number of erroneous single stock and ETF options trades. Many of the trades may wind up being erased but the error could still cost the firm upwards of $655 million, according to a person familiar with the situation.

    According to reports, the problem was caused by a computer error in which automated trading systems accidentally sent indications of interest as real orders to be filled at the exchanges. Goldman Sachs said in a statement that it faced no material loss or risk from the incident, but declined to comment further.

    Exchanges have their own rules for the appeal process. Exchanges will typically delete a price that is wildly out of range, but as it gets closer to the bid-ask quotes, it becomes less certain the exchange will cancel it.

    With so many new entrants trying to muscle into the UK banking sector, Banking Technology has put together a comprehensive list of known challengers to date and the technology they are using.


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