Reason for UBS's huge Facebook loss

Discussion in 'Wall St. News' started by freedinner, Jul 31, 2012.

  1. "Because there still was no confirmation, UBS's system automatically re-sent the orders," said the source, who has knowledge of UBS's systems."

    http://finance.yahoo.com/news/ubss-huge-facebook-loss-throws-185900085.html

    Also in the WSJ:
    http://online.wsj.com/article/SB100...?mod=WSJ_article_comments#articleTabs=article

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    Looks like a glaring mistake in designing their trading system. You do not submit another order intended to replace an old order until that old order is confirmed cancelled by the exchange.

    The mistake likely multiplied their losses by more than 10x.

    BTW interesting tidbit:
    "UBS handles most of the order flow from Charles Schwab Corp, one of the biggest U.S. brokerages, with about $1.8 trillion in client assets. It also takes orders from other retail brokerages, including TD Ameritrade and Fidelity."