If 145 simultaneous sell orders are booked, suspicions are bound to arise.
On July 23 it was Matif that took note when the orders were placed for the 10-year French government national bond contract. A three-month investigation ensued, and the instructions were traced to the order book of Salomon Smith Barney in London. It had had electronic trading equipment installed two weeks before by GL Trade Limited, the designer and supplier of software for the Paris Bourse. But Salomon strenuously denied making the trades.
Investigators CAP Gemini and Kroll Associates were brought in by Matif to clear up the dispute and look into the possibility of foul play. After months of interviews and complex technical work it emerged that there had been “prolonged, unintentional and inadvertent operation of the Instant Sell key by a Salomon trader” (to quote the summary of findings, released on 15 October). A trader had casually leant on a keyboard while watching another screen and ended up losing a packet. The bank asked Matif to cancel the trades but it refused. The trader has been identified and still works for the firm, but Salomon has shut down the system and now conducts futures trading through a third party.
Salomon argues that it was badly served by the Paris Bourse, which supplied the technology. It claims that when the equipment was installed a newer version of the trading software that protects the Instant Sell function was already available. And it says that in training sessions given by GL Trades, no information was given about where the function was or how it was activated. How were traders to know that the innocent F12 key could cause so much damage? Sources inside Salomon hint that when the final report is published this month the bank might take the matter further.
This was not the only electronic trading problem to hit Matif. One story tells of an independent trader in Paris who accidentally set off Instant Sell and could only stop a haemorrhaging of futures contracts by yanking out the power plug. Rebecca Bream
