A big exclusive for Reuters, which on Friday afternoon revealed the identity of the mystery trader CFTC chairman Gary Gensler said placed a disproportionately large sell order in CME e-mini S&P futures around the time of Thursday’s ‘flash crash’.
And it was not a high frequency trader or a hedge fund, but a money manager called Waddell & Reed Financial.
Waddell sold on May 6 a large order of e-mini contracts during a 20-minute span in which U.S. equity markets plunged, briefly wiping out nearly $1 trillion in market capital, the internal document from CME Group Inc said. Regulators and exchange officials quickly focused on Waddell’s sale of 75,000 e-mini contracts, which the document said “superficially appeared to be anomalous activity.”
And they emphasise that:
Gensler said there was no suggestion that the trader, who he did not identify, did anything wrong in only entering orders to sell. Gensler said data shows that the trades appeared to be a bona fide hedging strategy.
Reuters sources the exclusive to an internal CME document which also named Goldman Sachs, Interactive Brokers, JPMorgan Chase and Citadel Group as active traders in the e-minis contract on the day. The document also named high frequency trader Jump Trading.
Seems it's a mutual fund. Its futures sales may have been part of a portfolio-insurance-like strategy like the one that caused the '87 crash.
This proves that it's the whales (mutual funds, retirement, pension funds etc) who cause crashes.
Stop demonizing and scapegoating hedge funds and daytraders.
Seems it's a mutual fund. Its futures sales may have been part of a portfolio-insurance-like strategy like the one that caused the '87 crash.
This proves that it's the whales (mutual funds, retirement, pension funds etc) who cause crashes.
Stop demonizing and scapegoating hedge funds and daytraders.
If they are unexperienced with hedging strategies, it might be a WMD in their hands...But why is CFTC's Gensler saying it was "disproportionately" ? Maybe more than "just" a hedging strategy...
Waddell & Reed..., founded in 1937 is one of the oldest asset management and financial planning complexes in the United States, having introduced the Waddell & Reed Advisors Group of Mutual Funds in 1940. Today, Waddell & Reed Financial, Inc. is a publicly traded company (NYSE:WDR). The headquarters is in Overland Park, KS. -- Wiki
