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{{short description|Keyboard input error
A '''fat-finger error''' is a [[Computer keyboard|keyboard]] input error or [[Computer mouse|mouse]] misclick that occurs from a simple input mistake, causing unwanted secondary behavior. In common parlance, it simply refers to a common [[typographical error]] made on a [[touchscreen]] or physical keyboard that occurs when the wrong selection is made, or multiple selections are made due to options or keyboard keys being too close together.
A '''fat-finger error''' is a keyboard input error or mouse misclick in the [[financial market]]s such as the [[stock market]] or [[foreign exchange market]] whereby an order to buy or sell is placed of far greater size than intended, for the wrong stock or contract, at the wrong price, or with any number of other input errors.<ref>[http://www.investopedia.com/terms/f/fat-finger-error.asp Fat Finger Error.] ''[[Investopedia]]''. Retrieved 7 October 2014.</ref><ref>[http://www.nasdaq.com/investing/glossary/f/fat-fingers Fat fingers.] ''[[Nasdaq]]''. Retrieved 7 October 2014.</ref><ref name=JapanTimes>[https://www.japantimes.co.jp/news/2006/10/18/business/mizuho-securities-to-sue-for-j-com-loss/ ''Japan Times''. Retrieved 7 October 2014.]</ref>▼
In the context of [[financial market]]s, a fat finger error is specifically an instance where the details of a buy or sell [[Order (exchange)|order]] are mistakenly inputted by a user.
== In financial markets ==
▲
Automated systems within trading houses may catch fat-finger errors before they reach the market or such orders may be cancelled before they can be fulfilled.<ref name=Gorham>{{cite book|author1=Gorham, Michael|author2=Nidhi Singh.|title=Electronic Exchanges: The Global Transformation from Pits to Bits|url=https://books.google.com/books?id=vpTpY-HHWbkC&pg=PA299|date=2009|place=Burlington|publisher=Elsevier|isbn=978-0-08-092140-2|pages=299}}</ref> The larger the order, the more likely it is to be cancelled, as it may be an order larger than the amount of stock available in the market.
Fat-finger errors are a product of the electronic processing of orders which requires details to be input using keyboards. Before trading was
=== Deadlines for review
In order to have legal certainty at the stock exchange, all exchanges have tight deadlines to request a review and cancellation, if possible. At the [[New York Stock Exchange|NYSE]], [[BATS Global Markets|BATS]], [[Chicago Board of Trade|CBOT]], [[NASDAQ]], [[OMX]] and [[American Stock Exchange]] requests for review must be received "within thirty (30) minutes of execution time".<ref>{{Cite web|url=https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE%20Arca%20Rule%207.10.pdf|title=Rule 7.10. Clearly Erroneous Executions|last=|first=|date=2014-06-19|website=|publisher=|access-date=2016-11-20}}</ref><ref>{{Cite web|url=http://lawprofessors.typepad.com/securities/2009/10/sec-approves-consistent-exchange-rules-on-breaking-clearly-erroneous-trades.html|title=SEC Approves Consistent Exchange Rules on Breaking "Clearly Erroneous" Trades|date=2009-10-05|access-date=2017-11-02}}</ref>
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At the [[London Stock Exchange]] "any requests from member firms to cancel trades should be made to the Market Supervision department as soon as possible and in any event within 30 minutes of the trade time".<ref>{{Cite web |url=http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/rules-lse.pdf|title=Rules of the London Stock Exchange|date=2017-03-13 |archiveurl=https://web.archive.org/web/20120417144932/http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/rules-lse.pdf |archivedate=2012-04-17|url-status=dead |accessdate=9 May 2017}}</ref>
At the [[Singapore Exchange]], "the matter must be referred to SGX-ST within sixty (60) minutes from the time the error trade occurred".<ref>{{Cite web|url=http://rulebook.sgx.com/en/display/display_viewall.html?rbid=3271&element_id=1119&print=1|title=Singapore Exchange Rulebook - Errors|date=2014-02-24|access-date=2017-11-05|archive-date=2017-11-07|archive-url=https://web.archive.org/web/20171107020123/http://rulebook.sgx.com/en/display/display_viewall.html?rbid=3271&element_id=1119&print=1|url-status=dead}}</ref><ref>{{Cite
The [[Frankfurt Stock Exchange]] in Germany applies the following rules: in case of transactions in securities traded in Continuous Auction, the Mistrade application shall be submitted within two trading hours upon receipt of the execution confirmation pursuant to § 2 Paragraph 1 Clause 2. As far as transactions of securities other than structured products, which are traded in Continuous Auction, are concerned, the application term ends according to Clause 1 upon closing of trading hours for that day, so the mistrade application has to be submitted "within half an hour after the closing of trading hours" at the latest.<ref>{{Cite web|url=http://www.xetra.com/blob/1668982/e3a54514372bbaef45161bca1ad3e004/data/2015-11-30-Conditions-for-Transactions.pdf|title=Conditions for Transactions on the Frankfurter Wertpapierbörse|last=|first=|date=2015-11-30|website=|publisher=Frankfurt Stock Exchange|access-date=2016-11-20}}</ref>
=== Exclusion of rescission rights ===
In order to have [[legal certainty]] and in order to avoid the situation that courts have to decide [[Ex post|ex-post]] if a trade should be binding or not, erroneous trade rules of exchanges usually exclude civil-law [[Rescission (contract law)|rescission rights]].<ref>{{Cite web|url=http://www.xetra.com/blob/1668982/622ee54041b11b67ba072110272a38f2/data/2017-06-26-Conditions-for-Transactions.pdf|title=Conditions for Transactions on the Frankfurter Wertpapierbörse §32|date=2017-06-26|quote=Claims by civil law of the business parties according to § 2 Paragraph 1 and 2 to cancellation and adjustment of transactions as well as the right to appeal against transactions are excluded}}</ref>
This explains why banks usually have to carry huge losses when clearly erroneous trades occurred that have not been detected within 30 minutes.<ref>{{
===Examples===
Fat-finger errors are a regular occurrence in the financial markets:
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* In 2014, a Japanese broker erroneously placed orders for more than US$600bn (£370bn) of stock in leading Japanese companies, including [[Nomura Holdings|Nomura]], [[Toyota Motors]], and [[Honda]], which were subsequently cancelled.<ref>[https://www.bbc.co.uk/news/business-29454265 Japan stocks rattled by $617bn 'fat finger' trading error.] ''[[BBC News]]'', 2 October 2014. Retrieved 3 October 2014.</ref><ref>[https://www.bloomberg.com/news/2014-10-01/oops-possible-617-billion-trading-error-in-japan.html $617 Billion in Japan Stock Orders Scrapped After Error.] Anna Kitanaka and Toshiro Hasegawa, ''Bloomberg'', 1 October 2014. Retrieved 7 October 2014.</ref>
* In 2015, a junior employee at [[Deutsche Bank]] whose superior was on vacation confused gross and net amounts while processing a trade, causing a payment to a US hedge fund of US$6bn, orders of magnitude higher than the correct amount.<ref name=":0">{{Cite web|title = Deutsche Bank Error Sent $6 Billion to Fund in June, FT Reports|url = https://www.bloomberg.com/news/articles/2015-10-19/deutsche-bank-error-sent-6-billion-to-fund-in-june-ft-reports|website = Bloomberg.com|accessdate = 2015-10-20|first = Zeke|last = Faux|date = 2015-10-19}}</ref> The bank reported the error to the British [[Financial Conduct Authority]], the [[European Central Bank]] and the US [[Federal Reserve Bank]], and retrieved the money on the following day.<ref name=":0" />
* In 2015, the Investor [[Armin S.]] bought certificates from [[BNP Paribas]] at a price of €108 instead of €54,400 each. This caused a loss of €160m for [[BNP Paribas|BNP]].<ref>{{Cite web|url=https://www.linkedin.com/pulse/do-banks-internal-control-systems-work-michael-lusk/|title=Do banks' internal control systems work?|last=Lusk|first=Michael|date=2017-07-31}}</ref><ref>{{Cite web|url=https://www.lesechos.fr/11/03/2017/lesechos.fr/0211872239814_un-trader-reclame-161-millions-d-euros-a-bnp-paribas.htm|title=Un trader réclame 161 millions d'euros à BNP Paribas|date=2017-03-11|website=lesechos.fr|access-date=2017-06-24}}</ref><ref>{{Cite
* In 2016, it was believed a fat-finger error caused the British pound to drop 6% in just a few minutes to US$1.1841, its lowest value for 31 years.<ref>{{Cite news|url=https://www.theguardian.com/business/2016/oct/07/confusion-as-pound-falls-10-in-insane-asian-trading-and-no-one-knows-why|title=Bank of England investigating dramatic overnight fall in pound|last1=Treanor|first1=Jill|date=2016-10-07|last2=Davies|first2=Justin McCurry Rob|newspaper=The Guardian|language=en-GB|issn=0261-3077|access-date=2016-10-07}}</ref> A report by the [[Bank for International Settlements]] later concluded that the drop was not caused by a single factor.<ref>{{cite web |url=https://www.bbc.co.uk/news/business-38607480 |title=No single factor behind sterling flash crash, BIS says |author=<!--Staff writer(s); no by-line.--> |date=2017-01-13 |website=BBC News |access-date= 2017-01-14|quote=}}</ref>
*On 8 April 2018, in the [[2018 Samsung fat-finger error]] the company erroneously issued new shares to employees in a stock ownership plan. The error disrupted the Korean finance market.<ref>{{
* In 2018, [[Deutsche Bank]] mistakenly transferred 28 billion [[euro (currency)|euros]] to one of its outside accounts, more than the bank's [[market value]].<ref>{{cite web | last=Canny | first=William | title=Deutsche Bank's Bad News Gets Worse With $35 Billion Flub | website=Bloomberg.com | date=2018-04-19 | url=https://www.bloomberg.com/news/articles/2018-04-19/deutsche-bank-flub-said-to-send-35-billion-briefly-out-the-door | access-date=2021-05-12}}</ref>
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