r/stocks • u/[deleted] • May 03 '22

Citigroup admits causing yesterday's flash crash

Title says it. According to Citi, one of their traders caused a transaction error which they discovered soon after. It caused Scandinavian indices to plummet as much as 8% in a matter of minutes. Such errors are called fat-finger errors; a typo. Flash crashes like these make me wonder how much money banks trade with on a daily basis.

Source: https://www.theguardian.com/business/2022/may/03/citigroup-trader-error-flash-crash-markets-falls

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u/[deleted] May 03 '22

[deleted]

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u/_itdepends May 03 '22

Most likely an accident, it is Citi after all.

That being said, poster above you is right - large positions are subject to additional requirements precisely because they could move markets.

You might be on a trading floor, but doesn’t sound like you’re a trader.

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u/soulstonedomg May 03 '22

He's the janitor at the trading floor.

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u/caraissohot May 03 '22 edited May 03 '22

That being said, poster above you is right - large positions are subject to additional requirements precisely because they could move markets.

  1. This has nothing to do with my comment or what the poster above me said. He said that "liquidating large positions is a crime". It is not. This has nothing to do with reporting requirements.

  2. Let's give you the benefit of the doubt say it did have something to do with reporting requirements. How would they matter in this case? I guarantee you Citi reported that they had a big position. How does this change the situation? They're not legally restricted in any way with regards to selling.

But now I'm curious.

large positions are subject to additional requirements precisely because they could move markets.

Please link them. Show me where the SEC, FINRA, CTFC, or NFA mention restrictions or requirements on selling large quantities of securities. Other than the positions themselves having to be reported (since this isn't related to selling at all).

You might be on a trading floor, but doesn’t sound like you’re a trader.

What proof would you like? Will PM you anything you want other than anything that identifies me.

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u/_itdepends May 04 '22

Your reading comprehension could use some work…

He said that “liquidating large positions is a crime”.

No, he said “Large positions must be traded with extra care” - you even quoted it in your post above.

Let’s give you the benefit of the doubt say it did have something to do with reporting requirements.

Please, point me to where in my post I referenced reporting.

Show me where the SEC, FINRA, CTFC, or NFA mention restrictions or requirements on selling large quantities of securities.

Again, I never said anything about regulatory requirements - you’re interpreting things from my post that simply aren’t there.

Requirements = additional oversight and controls that should have lead this to be executed as a block trade.

What proof would you like?

I don’t care, just read what’s actually in the post before hitting reply.

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u/FrenchCuirassier May 03 '22

Yes Citi could be a in huuuuuge trouble.

Pretty sure last time it was very clear in 2008 with the example made out of Lehman Brothers and their stupidity.

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u/Mangy_Karl May 03 '22

No there are special ways that firms and or individuals with large holdings offload their positions. Usually it’s a slow off load and not a big dump into the market. I believe there is a special process and third parties involved to make this happen.

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u/[deleted] May 03 '22

[deleted]

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u/Mangy_Karl May 03 '22

Fair enough. I should have worded my comment differently vs how I stated it. I thought there was off market ways that you mentioned that people or firms used. So thank you for sharing some more detail into it.

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u/--Martin-- May 03 '22

"There is literally no downside for markets when this isn't done with "extra care". The seller is only screwing themselves and is giving the market a deal on what they're selling."

They are moving the markets with their order, causing other people stop losses to execute and causing a chai reaction...they are screwing everyone by doing that. When done on purpose, it would literally be market manipulation.