He was supposed to sell one share for 610,000 yen ($5,065
or Rs2.30 lakh). Instead, 610,000 shares valued
at $3.1 billion were offered for just 1 yen (1.2
cents or Rs5.52) each! Apparently, somebody made a very
costly typing mistake at the brokerage unit of Mizuho
Financial Group, Japan's second-largest bank.
error ultimately cost the brokerage house around 27 billion
yen ($224 million or Rs1,030 crore), as it tried to buy
back the shares after a whirlwind of trades. Makoto Fukuda,
Mizuho Securities' president, was deeply apologetic as
he addressed a press conference in Tokyo after the fiasco.
"It should never have happened, but someone unintentionally
ignored the alerts," he said.
watchers around the world have expressed concern about
what seems to be grossly inadequate control functioning
of the stock order system. The outrageous sell orders
in J-Com stock made it the most actively traded stock
on Thursday. The Osaka-based staffing company had sold
just 2,800 shares in its initial public offering (IPO)
earlier this month.
the brokerage house realised its mistake within three
minutes, four attempts to cancel the order failed. Even
the bank's central office couldn't stop it. Finally, Mizuho
decided to buy back most of the shares.
those three vital minutes, J-Com shares fell by the maximum
15 per cent limit, from its issue price of ¥610,000
to ¥572,000. Over the next eight minutes, close to
700,000 shares were traded, including one order for about
467,000 shares, valued at $2.2 billion (Rs10,120 crore).
J-Com stock finally closed at ¥772,000 yen, up by
the maximum permitted 15 per cent. The shares were suspended
from trading on Friday.
of market rules limiting price fluctuations, the shares
could not be bought for 1 yen but may have been sold as
cheaply as ¥572,000 yen each. But who gained? Market
gossip points the finger at day traders, who could have
made a killing selling the shares to institutional investors.
losses at Mizuho could well result in sackings, reduced
salaries and maybe even a government inquiry. Mizuho shares
fell by around 1.4 per cent, immediately following the
is by no means the first error on the Tokyo Stock Exchange
(TSE). On November 30, 2001, UBS AG sold over 600,000
shares in advertising firm Dentsu Inc for 16 yen apiece,
instead of the IPO price of ¥420,000 yen. Observers
feel the problem is unique to Tokyo's stock exchange.