It was 3:55 P.M. EST, just before the 4:00 P.M. closing of the New York Stock Exchange. A clerk on the trading floor of Salomon Brothers Inc. misread a program-trading order. Instead of entering the order correctly to sell $11 million worth of this particular stock, the clerk typed 11 million into the box on the screen that asked for the number of shares to be sold. Like most such firms, Salomon has direct computer links to the New York Stock Exchange (NYSE) that allow it to process security trades with lightning speed. When a second clerk failed to double-check the order as required by company policy, most of the trade as entered—amounting to $500 million, not $11 million—was sent to the NYSE’s computer system. Although the firm’s computer system did catch the error shortly after it was made and kept at least part of the trade from being executed, it was not before the error sent the stock market tumbling and caused near chaos at the Big Board.
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