Order error costs Belzberg Technologies $800,000
The failure to properly execute a handwritten buy-sell order on the floor of the largest options exchange in the United States will cost Belzberg Technologies $800,000, the company disclosed on Friday.
Three-month chart for Belzberg TechnologiesBelzberg Technologies said an error in fulfilling the manual order at the Chicago Board Options Exchange will result in a one-time pre-tax financial charge to be applied against the company's third-quarter earnings.
"Trading errors are a part of the brokerage business and can never be entirely avoided," said Belzberg chief executive officer Sidney Belzberg.
"That said, this is the first loss in the seven years of operating our floor brokerage that we have an error warranting public disclosure."
The company said it has implemented new management procedures and other guards to reduce the risk of a repeat of this error.
Belzberg Technologies gave few other details concerning the mistake. Most orders, however, whether for options or the underlying shares, are handled electronically.
Belzberg Technologies said the faulty order was a special request from a customer and was written out and executed manually, which usually entails a trader walking across the exchange floor to complete the request.
In past statements, the company has cited the possibility of "costly errors inherent in manual processing [of an order]" as a reason for using an electronic platform.
On Aug. 7, Belzberg Technologies is set to report its second-quarter results, which will be unaffected by the one-time charge.
The company earned approximately one-third of its $9.6 million revenue for the first three months of 2008 executing stock options orders.
Shares in Belzberg Technologies were up 29 cents, to $3.94, in mid-afternoon trading Friday.
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