$617 Billion in Japan Stock Orders Scrapped After Error

By Anna Kitanaka and Toshiro Hasegawa

Photographer: Kiyoshi Ota/Bloomberg

The biggest order was for 1.96 billion shares of Toyota Motor Corp., or 57 percent of... Read More

Stock orders amounting to more than the size of Sweden’s economy were canceled in Japan today, with an industry regulator saying it received a report about a trading error.
At 9:25 a.m. Tokyo time, orders for shares in 42 companies totaling 67.78 trillion yen ($617 billion) were canceled, according to data compiled by Bloomberg from the Japan Securities Dealers Association. JSDA received an error report from a member and is still confirming details of the matter, according to an official who asked not to be named as he isn’t authorized to discuss individual cases.
The biggest order was for 1.96 billion shares of Toyota Motor Corp. (7203), or 57 percent of outstanding shares at the world’s biggest carmaker, for 12.68 trillion yen through an off-exchange transaction. Toyota declined to comment. Other stocks with scrapped transactions included Honda Motor Co. (7267), Canon Inc. (7751), Sony Corp. and Nomura Holdings Inc. (8604)
“Fat finger” trading mistakes occur periodically. In 2009, UBS AG mistakenly ordered 3 trillion yen of Capcom Co. convertible bonds. In 2005, Mizuho Financial Group Inc.’s securities unit was unable to cancel a mistyped order for
J-Com Co., costing the bank 27 billion yen at the time. Still, today’s scrapped trades were of a far greater magnitude.
“I’ve never heard of orders this big being canceled before,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which oversees about $474 billion in assets. “There must have been an error.”

Fat Finger

While no harm’s been done because the orders were canceled, there should be an explanation to alleviate concerns, Sera said.
The Topix fell 0.4 percent to 1,321.61 as of 2:27 p.m. Tokyo time and shares of Toyota were up 1 percent at 6,525 yen as the yen weakened.
“It’s not rocket science that there was a fat finger here, but it reopens the question about accountability,” said Gavin Parry, managing director at Hong Kong-based brokerage Parry International Trading Ltd. “There is a probability a broker mistook the number of shares for the value of shares. We guess that’s why the OTC market sees big crosses –- it’s easier to cancel errors.”
Off-exchange or over-the-counter trades are conducted directly between two parties without supervision of the bourse.