FAT FINGER TRADE
- A ‘fat finger’ trade is an erroneous action caused by hitting the wrong key in the market.
- Some of these orders, which are placed at the extreme end of the operational range, are passively held in the order book, according to the NSE.
- Trades resulting from such orders, which are issued at unrealistic prices, cause price anomalies.
- Few trading members had placed orders on the exchange platform at prices that did not reflect the current market price and were far distant from the last traded price, according to the exchange.
- Trading members are also placing orders at prices that are at the extreme end of the exchange’s operational range and have no obvious or economic logic when compared to the last traded price, according to the statement.
- The NSE has asked its trading members to refrain from initiating or executing transactions that appear to be non-genuine on their own account or on behalf of their clients, as well as from engaging in practises that cause order book anomalies.
- They’ve been told to put in place suitable internal systems and procedures to ensure that such orders/transactions, including algorithmic trades, don’t end up on the exchange’s trading system.
- “Non-compliance with the circular will result in appropriate disciplinary action which may include departure from trading terminals.