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Mizuho tries to raise cash.

The bank is notorious for its 2005 trade botch-up in which a trader lost $225m in seconds

Dubai A streak of malicious glee caught Tokyo stock traders when Japan's second largest bank Mizuho on Tuesday last week announced a spectacular capital increase of $8 billion (Dh29.37 billion) in a bid to raise cash to meet stronger regulations of the country's central bank.

Traders recalled that Mizuho has the reputation to burn cash much faster than it earns it.

The bank won notoriety in 2005 when one of its stockbrokers committed the most embarrassing trade in the recent history of capital markets.

On December 8, 2005, one trader of the bank's subsidiary Mizuho Securities won the title "fat finger" when he botched an order to sell shares of Japanese staffing company J-Com. Instead of selling one share at a price of 640,000 yen, the trader placed a sell order of 640,000 shares for 1 yen, supposedly because he mistyped the numbers on his computer keyboard.

Despite the order being 41 times the number of J-Com's outstanding shares, the Tokyo Stock Exchange processed the deal. Mizuho desperately tried to cancel the order three times, but market makers at the exchange said they do not cancel an order even if it has been placed by mistake.

The wrong order resulted in a $225 million loss for Mizuho and caused the Japanese stock index Nikkei to drop 1.39 per cent on that day.

"Fat finger" was never named by Mizuho. The bank filed a lawsuit against the Tokyo Stock Exchange.

'fat finger' fallout

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Publication:Gulf News (United Arab Emirates)
Date:Jul 18, 2010
Words:279
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