08/20/2013 05:00 pm ET Updated Aug 20, 2013

Goldman Sachs Could Lose Up To $100 Million On Erroneous Trades: Report


A series of potentially erroneous trades made by Goldman Sachs Tuesday may ultimately cost the bank as much as $100 million, the Financial Times is reporting.

The bank, however, said it didn't expect to face material loss or risk due to the mishap, according to Reuters.

Here's Reuters' earlier report on the trading issue:

NEW YORK (Reuters) - U.S. exchanges are reviewing a batch of possibly erroneous options trades that occurred at Tuesday's market opening, and NYSE Euronext said it anticipates most of the affected trades on its Amex Options market will be cancelled.

NYSE Amex Options is reviewing a "large number" of the trades that took place in stocks beginning with H, I, J, K, and L between 9:30 a.m. EDT and 9:47 a.m. EDT, NYSE Euronext , which owns the New York Stock Exchange, said in a statement.

Some erroneous trades appeared to have been sent by Goldman Sachs equity options unit, according to a Wall Street Journal report, which cited sources. A call to Goldman Sachs was not immediately returned.

An industry source said the incident likely stemmed from a series of erroneous client orders that went to several markets.

It is another in a series of problems affecting exchanges. A year ago, a software mishap at Knight Capital Group led to millions of unintended orders flooding into the market over a 45-minute period.

On Monday, the continued roll-out of a new program to limit wild price swings in publicly-traded securities triggered dozens of trading halts as highly illiquid names were phased into the program.

Larry Weiss, head of U.S. execution trading at Instinet in New York, said on Tuesday, "Any time that an exchange decides to cancel trades, people are at risk."

He said the problem for traders is that the positions they thought they obtained and may be using to hedge another trade may not exist.

Options volumes were affected for some stocks, one strategist said. "It appears that the trading issue has involved stocks such as Kellogg , Johnson and Johnson and JPMorgan Chase and Co where options volumes rose to above-normal levels this morning," said options strategist Frederic Ruffy.

Nasdaq OMX Group Inc said trades on Nasdaq Options and Nasdaq OMX BX Options markets between 9:30 a.m. and 9:47 a.m. EDT are under review, while CBOE Holdings Inc said it is reviewing all trades on the Chicago Board Options Exchange and its C2 electronic venue from 8:30 a.m. to 8:41 a.m. CDT (1330-1341 GMT).

A NYSE Euronext spokesman said NYSE Amex Options did not have any systems problems, but declined to comment further. A CBOE spokeswoman also said it has been operating with no interruptions.

A Nasdaq spokesman declined to comment further.



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