Eurex trader accidentally loses £10m

A trainee trader on the German electronic exchange Eurex lost £10m after mistakenly pressing the wrong keys.

Eurex, which was formed from the merger of Deutsche Terminbourse and Soffex, the Swiss derivatives exchange, is where most German bond futures contracts are traded.

The problem occurred when a trainee was plugged into the simulation system and switched over to the live system whilst practising with £11.5bn worth of German bond future contracts. The contracts were then sold at a loss of £10m.

The mistake calls into question whether Liffe (London International Financial Futures and Options Exchange) could experience similar problems when its electronic system goes live on 30 November. A spokesman for Liffe said it has been running a full training scheme offline rather than a simulation that runs alongside the live version - thereby preventing similar mistakes.

According to Clay Barnes, electronic trading account manager for Keltec, IT supplier to the London arm of Eurex, the screens for the simulation and live environments of the Eurex system are very similar.

Barnes said Eurex is more vulnerable because the Deutsche Terminbourse produces its own software to go on the system. "Third party software has better security and better control, so it's less likely to happen to Liffe," he said.

Harvey Moses, sales and marketing manager for PAT Systems, explained the software package PAT is supplying to the UK exchange, "Is a client/server architecture using Windows. It sets up individual accounts for each trader. Every trader will have limits set on the contracts of that exchange. This will prevent similar errors from occurring on Liffe Connect."