QBE Shares Drop To A Couple Of Cents

By FutureNestEgg | July 30, 2008

A funny and interesting drama unfolded on Australian Stock Exchange yesterday. QBE Insurance is a part of ASX 200 Index. It has a weighting of about 2 percent in the index. QBE Insurance is a blue chip stock. In the morning the shares were trading at around $22.85.

Brokers place buy and sell orders on the computerised trading system. One broker was placing a sell order and he accidentally typed in the price as 2 cents…

And he was selling around 500,000 shares…So he was basically selling a huge parcel of shares at 2 cents – AT that time, QBE was trading around $22.85 – ooooouch. The shares were snapped up quickly – who wouldn’t want to buy at such a cool price.

This drop in QBE shares immediately pushed it out of the ASX 200 index. Its removal caused the index to drop 100 points (all of a sudden).

The mistake was soon discovered. ASX immediately suspended trading in QBE Insurance shares. All trades below $22.20 were cancelled. So everything was back in normal.

But it is interesting to note that errors like this can happen – Very rare apparently – But can happen – The systems can be computerised but it is humans operating the system – And everyone can make mistakes. What a day the broker who made the error must have had !!!

I had a chuckle when I read this story in the morning papers…