From the November 01, 2010 issue of Futures Magazine • Subscribe!

Metal head trades

imageTwo errors involving electronic metal markets occurred on different continents within a month. The London Metal Exchange cancelled more than 200 lots of aluminum on Oct. 4 at its Singapore exchange. Prices fell by more than 3% before recovering after what traders called a “big figure typo.” Luckily, Chinese markets were closed so there was no possibility for traders to open an arbitrage on the trade.

CME Group reported on Sept. 14 that a number of test trading orders were inadvertently placed into active energy and metals markets on CME Globex. While no indication was given as to the number of orders affected, they “began working with affected customers and implemented other corrective steps,” according to a statement. No trades were busted as a result of the error.

“When it comes to trade cancellations, there is always a wounded party. It is very important that the venue has credibility,” says Paul Zubulake, senior analyst at Aite Group.

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