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February 26, 2009
A badly designed trading system
In a statement, UBS said an error from one of its internal trading systems mistakenly placed an order for three trillion yen instead of the intended 30 million yen. UBS placed a cross order -- simultaneously buying and selling an issue – on the TSE's system for off-hours trade.At around noon, the TSE halted trade in Japanese videogame maker Capcom's 15 billion yen convertible bond issue, which is due to mature on March 31. The bourse later said it would cancel the mistaken trade [at no cost to UBS].
UBS Japan Unit Places Erroneous Bond Order
It is hard for me to see this story as anything other than a public admission of failure by technology managers and controllers over at UBS. I worked on an electronic trading system for futures, and every trader had a limit, set by either the firm or the exchange if the firm didn't set one lower to limit the number of contracts they could trade. I'm stunned they didn't think to implement such a system over at UBS. It could be that they did develop such a system, but their internal controls failed to populate what their limit should be, but even if that is the case that reflects poorly on UBS, implying that they either do not understand how to develop useful default settings or overrode good defaults through incompetence. If they didn't have the limit functionality in their software, that isn't good either. So, as I said, this doesn't reflect well on UBS.
Posted by OneEyedMan at February 26, 2009 6:41 AM
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