Oh dear… it’s not quite a “fat-finger” case this time but rather, what you could call a “thick” moment for a hapless trader.
J-Com, the Japanese recruitment company at the centre of a “fat finger” trade in 2005 , was this week again caught up in a market bungle after a trader mistakenly bought up a chunk of its shares in the belief it was a similarly named but unrelated company at the centre of a takeover deal.
As the FT noted, the trader appeared to have mistaken J-Com for Jupiter Telecommunications, a cable television group also widely known as J-Com and which on Monday was the subject of a tender offer by Sumitomo:
To make matters worse the stock price of both Jupiter Telecommunications, Japan’s largest cable television operator, and J-Com were at similar levels before the market opened for trading on Tuesday. Shares of Jupiter Telecommunications were Y90,000, while J-Com shares were Y87,000.
Sumitomo made the tender offer for Jupiter Telecommunications on Monday after the close of trading in an apparent challenge to telecoms operator KDDI’s bid to become its largest shareholder.
It also generated market expectations that demand would surge for Jupiter shares on Tuesday, the FT said.
J-Com shares initially surged as much as 8.6 per cent to Y94,500, before eventually closing up 3.1 per cent after more than a month’s volume of 2,401 shares changed hands, the FT report added.
In the previous J-Com share trade botch-up, when J-Com (the recruitment company) listed in December 2005, Mizuho Securities, the Japanese brokerage, accidentally tried to sell 610,000 shares in J-Com for Y1 each.
From the FT:
Mizuho had been trying to sell one share for Y610,000. The error was compounded by a glitch in the TSE’s computer system that blocked attempts to cancel the trade.
This time, as one witty Tokyo trader noted:
Supposing that there’s nothing from a regulatory perspective to prevent you from trading the wrong stock if you are pursuing an onomatopoeic pairs trading strategy, there remains the small matter of fiduciary responsibility to investors et al.
Never mind, if the stock appears to be trading “below the deal price, wow!!” then maybe you’re the only one who spotted it and it’s a free arb, you can go in guns blazing. Or maybe you could just ask.
Once the hubbub from watching 2462 “J-Com Holdings” open up 10% on one month’s volume traders reverted to speculation as to the nationality of the culprit with most taking the over on a non-local. “I tried to cancel but Arrowhead [the TSE's new electronic trading system] is so fast…”
Related links:
Markets: Ghosts in the machine – FT
Liberty to exit Japan with sale of J-com – FT