Page last updated at 11:22 GMT, Wednesday, 25 February 2009

UBS in $31bn bond order mistake

UBS branch
This is not the first time a unit of UBS has made such a mistake

As costly errors go, mistakenly placing a order for 3 trillion yen ($31bn; 21bn) of company bonds is likely to rank as one of the worst.

Yet that is just what has happened at a Japanese unit of Swiss bank UBS, which blamed a computer glitch for the error.

Thankfully for UBS Securities Japan, the Tokyo Stock Exchange is said to have been able to cancel the order.

However, it is far from the first time that UBS or other firms have made similar errors in Japan.

'Fat finger' denial

According to reports, a UBS Securities Japan employee had been trying to buy 30 million yen of bonds in computer games firm Capcom, but because of a computer error, 3 trillion yen's worth was ordered instead.

UBS has insisted that the mistake was not human error - sometimes described as a "fat finger" mistake where a worker types in the wrong number.

Thankfully for UBS, the order was made in electronic out-of-hours trading, which analysts said made it easier to cancel.

A spokesman for Capcom, best known for its Resident Evil game, said the firm had received an apology from the Tokyo Stock Exchange for the inconvenience.

Past errors

This is the second time in eight years that a UBS unit or other company has given the Tokyo Stock Exchange an incorrect order.

In 2001, a UBS business mistakenly issued an order to sell shares in Japanese advertising firm Dentsu.

UBS subsequently had to buy more stock in Dentsu in order to honour the order.

Other firms have also had similar mishaps, such as brokerage Mizuho.

In 2005 a Mizuho trader mistakenly agreed to sell 610,000 shares for as little as 1 yen each, rather than one share for 610,000 yen.

As a result of an error on the Tokyo Stock Exchange's computer systems, it would not respond to Mizuho's repeated attempts to cancel the deal.

As a result, Mizuho was left 40.5bn yen out of pocket.

The then boss of the stock exchange, Takuo Tsurushima, was forced to resign as a result of the error.

These incidents resulted in the exchange introducing new rules in 2007 to allow erroneous orders to be cancelled more promptly.

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