Typing Error Triggers 33% Plunge in Elbit Stock at the Tel Aviv Stock Exchange

Elbit Systems — one of Israel’s largest defense and technology companies — briefly lost one-third of its market value in what turned out to be a trader’s costly typing error.

At noon, trading screens showed a stunning 33% drop in Elbit Systems’ share price, raising alarm across the Tel Aviv Stock Exchange (TASE). While such a collapse might suggest a global breakthrough in diplomacy — perhaps a simultaneous end to the wars in Ukraine and Gaza — the cause was far more mundane: a human error.

A trader mistakenly submitted a sell order for 66,000 Elbit shares at a price more than 90% below market value, initiating a chain reaction that triggered TASE’s volatility buffer — a mechanism designed to pause trading when extreme price swings occur.

How It Happened: A Costly Mistake Left Uncorrected

Despite having nearly six minutes to cancel the erroneous order during the auction period that followed the volatility halt, the trader did not act. As a result, a major transaction worth NIS 64 million was executed at artificially low prices. The stock price plummeted by 33%, distorting flagship indices and shocking investors. Fortunately, the transaction was later canceled, minimizing financial damage and restoring the share price to its normal level.

The mishap underscores the importance of safeguards in modern trading systems. On TASE, trading occurs through a combination of opening and closing auctions, with continuous trading in between. Orders to buy and sell are matched based on price compatibility. Errors — such as a mistyped order for a massive share quantity at an off-market price — can lead to sudden, dramatic swings in stock value.

 TASE’s Safety Net

To reduce the impact of such mistakes, TASE employs two key mechanisms: volatility buffers and post-trade cancellation requests.

The volatility buffer halts trading in a stock when its price moves sharply relative to the previous day’s closing price or its most recent trade. The thresholds for triggering a halt vary by index:

• TA-35 stocks: 7% static or 4% dynamic fluctuation

• TA-90: 8% static or 4% dynamic

• SME60 or Growth indices: 9% static or 5% dynamic

Once triggered, trading in the affected stock pauses for 5–6 minutes, during which a new auction occurs. If the disruption is due to a typo or other error, the trader can cancel the problematic order during the auction.

The second layer of protection is the ability to cancel transactions after execution, provided certain conditions are met:

• A dynamic price move of at least 6% for TA-35 stocks or 12% for others

• Financial damage exceeding NIS 50,000

• The trader reports the error within 20 minutes

If approved, the transaction is canceled, and the trader pays a NIS 10,000 fine plus VAT. Exceptions may be considered at the stock exchange’s discretion, though typically only when the cancellation criteria are closely met.

A Breakdown in Procedure

In Elbit’s case, the trader’s initial order amounted to approximately NIS 100 million at then-current prices. However, due to the massive undervaluation in the order, the sell offers overwhelmed all available buy offers — most of which were only marginally below market price (down 0.1% to 4%). Once the share price dropped more than 4%, the dynamic volatility buffer was triggered, suspending further trades and moving the remaining 64,000 shares into the reopening auction.

The trader had an opportunity to cancel the order during this window but failed to do so — for reasons still unknown. Once resumed, the mistaken transaction was ultimately reversed under TASE’s error-handling policy.

Not the First, and Likely Not the Last

Such errors are not uncommon, though large-scale ones are rare. In 2022, TASE’s Board of Directors approved technical updates to the criteria for erroneous transaction cancellations, but the Israel Securities Authority has yet to approve the changes.

While most trades proceed without issue, this incident is a stark reminder of the potential damage a simple mistake can cause — and of the critical importance of robust safeguards in high-frequency financial environments.