SHANGHAI, March 14 A stock index futures
contract in China tumbled in a "flash crash" in late trading on
Tuesday, before bouncing back within a second in what traders
said may have been a trading error.
China's SSE 50 Index Futures for March delivery
slumped 9.4 percent at 2:25 p.m. local time (0625 GMT), but
immediately recovered from the sharp loss. The contract will see
its last trading day this Friday.
"This is likely a trading error," said Huang Can, head of
investment at hedge fund house Shenzhen City Sheng Guan Da Asset
Investment Ltd, who described the fall as "horrible".
"It shows that the market is still not liquid enough,
although the fact the price bounced back instantly points to
maturity of the market," he said, adding his company failed to
capture the flash arbitrage opportunity.
There was little impact on the underlying index, the SSE 50
Index. The China Financial Futures Exchange could not
be immediately reached for comment.
The mysterious fall comes a month after China's securities
regulator relaxed certain rules on stock index futures trading
as Beijing starts to gradually unwind restrictions imposed
during the 2015 stock market crash.
It revives memories of a trading mistake by Everbright
Securities in August, 2013 that triggered a short-lived surge in
major Chinese stock indexes, and led to heavy fines on the
brokerage for illegal insider trading involving stock index
Huge market swings could be caused by "fat finger" errors by
human traders to malfunctioning automated trading platforms.
(Reporting by Samuel Shen and John Ruwitch; Editing by