India's biggest 'fat-finger' trade; broking house loses Rs 250 crore

In the biggest trading mistake in India so far, an unknown broking house on Thursday lost around Rs 200 to 250 crore due to a fat-finger error.

The fat-finger error hit the NSE derivates segment late on Thursday after an unknown broking house placed the order. A fat-finger trade is an erroneous trade that happens due to pressing a wrong key on the keyboard or a mouse misclick.

On Thursday, between 2:37 and 2:39 pm, a trader inadvertently punched in an intraday sell order for 25,000 contracts (12.5 lakhs shares) on the illiquid, deep-in-the-money 14,500 Nifty call option expiring on June 2. The price of that option contract (50 shares in a contract) was around Rs 2,100 per share but since the trader quoted a much lower price the share plunged from Rs 2,100 to as low as 15 paise in a matter of minutes.

Also read/watch| Explained: What is a fat finger trade and how it can make you lose crores!

Even though the traders tried to square off the pandemonium of wild swings left many out to dry. With reports now suggesting that losses topping Rs 200 cr are being reported.

Experts opined that that NSE has put in place alarm systems when trades are executed much above or below prevailing prices to sight out erroneous trades. But however no alarm was raised in this case by the exchange.