Goldman Sachs hit by trading software glitch

Goldman Sachs hit by trading software glitch

Computer error could cost hundreds of millions of dollars

A computer system glitch caused a wave of erroneous orders to be made by Goldman Sachs on Tuesday, potentially losing the investment banking firm hundreds of millions of dollars.

It is believed that a problem with an internal software program led to orders mistakenly being placed in the stock options market. Some of the trades may now be voided, following a review by officials.

According to sources cited by the Wall Street Journal, the error could results in losses running into hundreds of millions of dollars, depending on how many trades are allowed to stand.

The false orders are believed to have been made following changes made to the software program that aids in determining prices at which the firm buys or sells options. This led to orders being made significantly lower than market rates.

The issue has now been fixed, and the bank is said to be investigating the cause of the error.

The bank said in a statement that the exchanges are working to resolve the matter, but downplayed any financial losses to the firm. "Neither the risk nor the potential loss is material to the financial condition of the firm," the bank stated.

The computer glitch follows problems on the Chinese stock exchange last week. Securities broker Everbright now faces a proprietary trading ban after a deluge of orders were mistakenly placed following a internal system error.

In recent years there have been a number of high profile electronic trading system failures. Last year a consortium of firms had to rescue Knight Capital after a software glitch caused the trading firm to lose almost £300 million. This followed Facebook's disastrous IPO, which saw Nasdaq agreeing to pay $10 million dollars to the social networking company after a design flaw in the trading system held up the highly-anticipated event.

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