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NEW YORK - MAY 6: Financial news of todays turbulent stock market is displayed on a news ticker in Times Square May 6, 2010 in New York City. The Dow Jones industrials plunged nearly 1,000 points before ending the day down at 347. (Photo by Daniel Barry/Getty Images)
The flash stock market crash that sent the financial world scrambling Thursday may have started in Chicago, reports suggest.
Stocks plummeted after a trader mistakenly entered “B” for billion instead of “M” for million when trading shares of Proctor & Gamble in a move being referred to as the “fat finger glitch”.
Because much of the U.S.'s trading is done electronically, the drop in Procter & Gamble's price was enough to trigger "sell" orders across the market.
The Dow fell 998.50 points in its largest point drop ever, eclipsing the 780.87 it lost during the course of trading on Oct. 15, 2008, during the height of the financial crisis. The Dow closed that day down 733.08, the biggest closing loss it has ever suffered.
The Chicago Mercantile Exchange Group released a statement in an attempt to squelch the rumor that the trading error started at its e-mini stock-index futures contracts.
"While our policy is not to comment on individual participation in our markets, in light of volatile market conditions, CME Group confirmed that activity by Citigroup Global Markets Inc. in CME Group stock index futures markets does not appear to be irregular or unusual in light of market activity today," CME said in the statement.
What was unusual was the speed with which stocks plummeted.
"I think the machines just took over. There's not a lot of human interaction," said Charlie Smith, chief investment officer at Fort Pitt Capital Group. "We've known that automated trading can run away from you, and I think that's what we saw happen today."
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The Securities and Exchange Commission plans to investigate.