Magazine article Modern Trader

Matif Probes Jyly Glitch

Magazine article Modern Trader

Matif Probes Jyly Glitch

Article excerpt

Trouble is brewing between the Marche a Terme International de France (Matif) and one of its larger clearing firms, Salomon Smith Barney. The debate could tinge the reputation of Matifs electronic system, the NSC, which is to be released under the [Globex.sub.2] banner in September.

On July 23, between 9:05 a.m. and 9:10 a.m. Chicago time, a series of sell orders was entered into the NSC at the market. Each order was for 100 contracts, and the total input was 10,000 contracts, according to Matif. The notional bond, which had been trading at 105.10, dropped 149 basis points to 103.61 before it bounced back. Traders scurried to determine what happened. Some thought it was a bad tick and that any trades would be busted.

What evolved was a strange story: allegedly a trader in the Salomon Smith Barney office in London had input the trade. Stories vary on whether or not he had hit the button several times by mistake. Neither Matif nor Salomon is talking about particulars; however, some trades between counterparties were busted, while others were not. Some commodity trading advisors caught on the wrong side of the trade cried foul.

A Matif spokesman says the Matif did not bust the trade because the exchange could not find any "manifest" error, which would show if the trader had put in a trade incorrectly. For example, a trader who meant to trade 10 contracts and pushed the zero too many times would have caused a manifest error. …

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