The U.S. Securities and Exchange Commission is investigating a brief but significant panic on the markets.
U.S. and Canadian indices both took big hits on Thursday – and now there are suggestions it may all have been started by a simple typo.
It appears the massive selloff may have been triggered by a typo made by a trader who typed a ‘B’ for billions instead of an ‘M’ for millions.
Many traders’ computer programs automatically recognized the markets were beginning to tumble and started to dump their holdings, creating the tailspin.
The Dow Jones Industrial slid nearly a thousand points and the TSX lost more than 450. Both markets recovered some of their losses before the close, but Georgetown University finance professor James Angel says it shows the system for limiting those big sell-offs needs to be modified to catch up with technology.
“What we need is a real-time shock absorber that will kick in automatically without waiting for humans to recognize that something has crashed,” he said.
Angel says that although the markets adjusted when people realized what happened, the system is still pretty “shell shocked.”
Asian markets have tanked in overnight trading with Japan’s Nikkei Index down three per cent. and the Hang Seng in Hong Kong losing one. The markets in Germany and Britain are each down a little more than one per cent this morning.
The markets were already in a state of unrest because of the Greek debt crisis. Today, the leaders of 16 European countries that use the Euro will meet in Brussels to finalize a rescue plan.
In addition, Germany’s parliament will vote on its $28 billion contribution to the loan package.