(FiveNation.com)- Just hours after the European stock markets experienced a “flash crash,” Citigroup admitted one of its traders made a transaction error causing the crash.
A “flash crash” is when the stock market experiences an extremely rapid decline in the price of a number of assets due to human error.
Monday’s rapid decline prompted trading to be briefly suspended in several European markets. At the peak of the crash, 300 billion euros were wiped out from the market in a matter of minutes.
The New York-based Citigroup confirmed one of its traders made an error while inputting a transaction. The error was identified in a matter of minutes and quickly corrected.
But the damage was done. The error saw Nordic stocks hit especially hard. Sweden’s benchmark OMX 30 dropped as much as 7.9 percent before recouping most of the losses, closing down 1.9 percent by the end of trading.
Sweden’s financial supervisory authority said on Monday that it was in contact with Nasdaq, which is the primary securities exchange of the Nordic countries, and was investigating the incident.
The STOXX Europe 600 index of Europe’s leading shares dropped 3 percent before closing down 1.5 percent at the end of the day.
Other indices, including those from Germany, Italy, and France, also plunged, but they were able to recoup the losses by close of trading.
Nasdaq Stockholm spokesman David Augustsson told Bloomberg that the first priority was ruling out technical issues in their systems. The second priority was ruling out external attacks on their systems. Both were excluded and Nasdaq ruled out the possibility that the “flash crash” was due to an error in its systems.
This isn’t the first “flash crash” caused by Citigroup.
In 2020, a Citigroup trader accidentally transferred an interest payment of nearly $900 million to creditors of Revlon cosmetics company. The transfer was supposed to be for $8 million.
Citigroup was subsequently fined $400 million by federal regulators for failing to correct deficiencies in its risk and control systems.