BREAKINGVIEWS-Aussie bourse fat-finger flub rings alarming bell

By Antony Currie

MELBOURNE, Aug 7 (Reuters Breakingviews) - Everyone gets names wrong sometimes. That's little consolation to the poor souls at the Australian Stock Exchange who on Wednesday mistook TPG Telecom TPG.AX , the country's third-largest phone company, for U.S. private equity firm TPG Capital as the buyer in an M&A deal. The resulting A$520 million ($338 million) hit to the erroneously identified suitor's market value rings some alarming bells.

It was a simple case of human error, the bourse admitted, when staff at the ASX published the official statement about TPG Capital's A$621 million buyout of automotive software outfit Infomedia IFM.AX under TPG Telecom's ticker. Shares of the company formerly known as Vodafone Hutchison Australia fell 4% before trading was halted - two hours later - so that the ASX could fess up and nix the trades; even so they closed down 5%.

Granted, the loss pales in comparison to past so-called fat-fingered financial blunders. In 2018, a Samsung Securities 016360.KS employee mistakenly sent 1000 shares instead of 1000 won as dividends to employees, resulting in an $81 billion error, using current exchange rates. Deutsche Bank DBKGn.DE mistakenly sent a hedge fund $6 billion a decade ago - though got it back. Citigroup C.N topped that last year, wiring a customer $81 trillion instead of a mere $280, before it was reversed at the last minute.

Trouble is, ASX's goof is not an anomaly for the company. It is already under fire for repeated problems trying to replace its ageing clearing and settlement systems, including an outage in December. The Australian Securities and Investment Commission in June launched an investigation into governance and risk management, following its decision last year to sue the exchange alleging it made misleading statements about the project's progress.

Wall Street banks usually pay for their errors with lower earnings, fines or reputational hits - or all of them. The ASX's latest gaffe could have more significant consequences. CEO Helen Lofthouse's position looks insecure - ASX's stock has fallen 20% in her three years in charge. The bourse's monopolistic grip on the domestic stock market also appears fragile. Australian Securities and Investments Commission is in the final stages of considering Chicago-based Cboe Global Markets' CBOE.Z application to list, rather than just trade, Australian stocks. The fat finger at the ASX makes an approval look even more likely.

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CONTEXT NEWS

Shares in TPG Telecom fell more than 4% in early trading on August 6 after a market announcement from the Australian Stock Exchange wrongly identified the company as the buyer of another ASX-listed firm, Infomedia, for A$651 million ($423 million). The actual purchaser of the automotive software outfit is U.S. private equity firm TPG Capital.

The bourse cancelled the trades after taking some two hours before explaining the mistake. TPG Telecom's stock initially recovered most of the losses but then closed down more than 5%.