These days the margins in the derivative trading are very tight. Once upon a time, during the last days of the open outcry trading, the broker AFS made small mistake. With an order for 250 future rolls the broker messed up badly with a negative value of the future spread, instead of receiving 2.30, they paid 2.30. Shit happens, all traders will recognize the trouble with negative values. In the current trading environment, AFS would have lost 5 cent, as there’s always a liquid and deep market in the future roll. Back in 2001 however, they really paid 4,60 too much. That’s some 175.000 euro – and they were lucky as AFS traded 57 lots against their own client, leaving 193 future rolls executed against a terrible price. AOT didn’t want to cancel the trade, and the other counterparty (IDE) offered to settle the trade at even money.
There has been a long and probably expensive legal clash between AFS and Euronext. In 2006 the court judged AFS to pay for their own mistake. A higher court ruled last year both parties should split the bill, as Euronext should have had fair mistrade regulations, and their orde system was even worse than their website. This week the highest court decided to put all the blame back at AFS. Bad luck.
Legal details over here (Dutch).
