BarCap suspended for short selling glitch in Japan
30 September 2011 Osaka
Image: Shutterstock
Barclays Capital faces administrative sanctions from the Japanese financial regulator following the firm's report of a technical glitch with its system connecting to the Osaka Â鶹´«Ã½ Exchange (OSE).
In a released statement, Japan's Financial Services Authority (FSA) wrote that the violation was a result of inadequate management of the electronic data processing systems by BarCap's affiliate in Japan (BJCL).
"The short-selling in breach...was due to BCJL's error in designing the system through which BCJL ordered equity trades to the Osaka Â鶹´«Ã½ Exchange. This error was related to the indication of the fact of short-selling. BCJL started the operation of the system without checking for such an error...it continued the operation of the system without the appropriate system check for a year and a half...In addition, BCJL conducted short sales at a price equal to or lower than the latest published price immediately prior to the short sale." the FSA wrote.
In a statement released by BarCap, the firm states that upon discovering the error, it immediately reported the error to the regulators and suspended all transactions in cash equities which used the conversion system to place orders to the OSE.
"[The error] was caused by an IT system coding error and an internal review concluded that there was no deliberate intention to manipulate the market and derive a benefit...[the internal review] also concluded that the technical error was only in the system connecting to the OSE...No clients were impacted by the IT coding error," wrote BarCap.
Administrative action against the firm by the FSA include a business suspension order between the 11 and 24 October and business improvement orders.
In a released statement, Japan's Financial Services Authority (FSA) wrote that the violation was a result of inadequate management of the electronic data processing systems by BarCap's affiliate in Japan (BJCL).
"The short-selling in breach...was due to BCJL's error in designing the system through which BCJL ordered equity trades to the Osaka Â鶹´«Ã½ Exchange. This error was related to the indication of the fact of short-selling. BCJL started the operation of the system without checking for such an error...it continued the operation of the system without the appropriate system check for a year and a half...In addition, BCJL conducted short sales at a price equal to or lower than the latest published price immediately prior to the short sale." the FSA wrote.
In a statement released by BarCap, the firm states that upon discovering the error, it immediately reported the error to the regulators and suspended all transactions in cash equities which used the conversion system to place orders to the OSE.
"[The error] was caused by an IT system coding error and an internal review concluded that there was no deliberate intention to manipulate the market and derive a benefit...[the internal review] also concluded that the technical error was only in the system connecting to the OSE...No clients were impacted by the IT coding error," wrote BarCap.
Administrative action against the firm by the FSA include a business suspension order between the 11 and 24 October and business improvement orders.
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