The management of the Japanese stock exchange was able to breathe a sigh of relief yesterday after a typing error amounting to approximately 67.78 trillion yen (approximately $617 billion) was canceled at the last minute and not executed.
""This could definitely happen in the US as well," Larry Tabb, founder of the research firm Tabb Group, tells Bloomberg.
""We do have circuit breakers and other means of checking execution instructions before they are executed, but there is still not enough control over transactions between two or more external entities, and this can cause a lot of chaos.".
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The typo in Japan is causing a lot of "noise" among traders and exchanges around the world, due to its unusual size. Part of the mistake was the sale of about 50% of Toyota stock.
"Fat finger" type errors by a programmer or an executor of instructions happen from time to time and can lead to a "flash crash" on the stock markets.
About a month ago, a technical error at CME Group led to a trading halt of about 4 hours at the world's largest futures exchange, where contracts for stock indices, bonds, commodities, and more are traded. Errors at Barclays caused sharp fluctuations in many stocks, including AOL and Caterpillar.
"No system is ever perfect, and we’re always trying to improve systems and controls," says James Engel, a finance professor at Georgetown University. 'As Darth Vader said in one of the Star Wars movies, "Don’t trust technology blindly.''.
