‘Fat finger’ error sends airline stock on wild ride

Shares in one of the Philippines’ largest airlines plunged by almost 40% before recovering almost all of their value, prompting talk among brokers of a ‘fat finger’ error. The curious movements in Cebu Air’s stock began late in Tuesday’s trading session in Manila, when shares in the airline collapsed by 37% to 58 Philippine pesos ($1.13) during the run-off period immediately prior to the bourse’s close. Orders to buy or sell cannot be cancelled during the run-off period, traders said. That represented the airline’s biggest one-day fall since going public nearly a decade ago. Cebu Air’s share price did not stay down for long. On Wednesday, the stock surged 50% to 87 pesos at the market’s open, which is where it stayed for the rest of the day. Traders said the initial plunge in the stock had been caused by a major broker erroneously entering a sell order at a low-ball price of 58 pesos, rather than 98 pesos, a share. “Other brokers went in and bought the …order,” said Rens Cruz, an analyst at Regina Capital Development in Manila. It was “an obvious trading error”. Traders in the Philippine capital and various media reports identified Quality Investments and Securities, a local broker, as the culprit. The company did not immediately respond to a request for comment.<br/>