Market Inquiry Focuses on one eMini Trader

Discussion in 'Wall St. News' started by ordinary_trader, May 11, 2010.

  1. Here we go again - Blame the futures traders

    WASHINGTON — Regulators examining the causes of the brief stock market free fall last Thursday are looking closely at heavy selling in the market for stock-index futures by a single trader, beginning 10 minutes before stock prices began to plummet.

    Gary Gensler, the chairman of the Commodity Futures Trading Commission, said at a Congressional hearing on Tuesday that during that crucial time period, the futures trader, whom he would not identify, accounted for about 9 percent of trading volume in the most actively traded stock-index derivative contract, known as the 500 e-mini futures contract.

    All of the trader’s orders were to sell, Mr. Gensler said, while most of the other 250 traders who were active in the same market that day were both buying and selling securities.

    As the trader’s orders went through, the futures index on the Chicago Mercantile Exchange began to plummet.

    The identity of the trader remained unclear. Terrence A. Duffy, executive chairman of the CME Group, which operates the Chicago exchange, said on Tuesday: “We obviously won’t divulge that market information. We are in contact with the folks that did the trade. There is no question that it is a bona fide hedger” and not someone intending to disrupt the markets.

    Moments after the trade, individual shares traded on markets around the country started to drop sharply, and regulators are looking at whether the trade in the futures market could have been a catalyst for the spiral.
  2. There's the blue print to move the market.:cool:
  3. From everything I have read this situation seems pretty clear. Hi frequency trading has decimated the market making companies. HFT companies do not provide any actual liquidity. They immediately flip in and out of their positions without ever holding onto anything. They also play very similar games to the point where they act out herd mentality electronically. As all the HFT trading companies went to sell their positions resulting from the large selling volume, there weren't enough non HFT counter parties (i.e. liquidity providers) left to keep the market from crashing. The abnormal market drop resulted in the HFT companies to completely pull their markets, leaving no market at all.

    This situation is a natural result of HFT driving the real liquidity providers out of the marketplace, combined with heavy selling volume. Expect very similar results in the future during any period of one sided selling.
  4. maxpi


    It was Jack Hershey, his gf called up and asked him what he was wearing and breathed some sighs into the phone.. he sold everything to go be with her...
  5. spd


    lolwut? 250?
  6. Hilarious.

    Does this mean that Jack Hershey is still alive and kicking?

  7. Total and utter nonsense. Distraction from the most important question and I repeat myself again :

    where have been the classic market makers like Goldman, J.P. Morgan, BoFA/Merrill, Morgan Stanley, Citi, Deutsche Securities, UBS, Credit Suisse on Thursday ???????????
  8. Wow, Congress is filled with morons if they let Gary Gensler get away with such ludicrous statements.

  9. 9 percent in a 10 minute period, is that about 5000 cars?
  10. 35802.D. Position Limits 3
    A person shall not own or control more than 20,000 Standard and Poor’s 500 Stock Price Index
    contracts or equivalent contracts net long or net short in all contract months combined. For
    purposes of this rule an E-Mini Standard and Poor’s 500 Stock Price Index futures contract shall be
    deemed to be equivalent to one-fifth (0.20) of a Standard and Poor’s 500 Stock Price Index futures
    contract. For positions involving options on E-Mini Standard and Poor’s 500 Stock Price Index
    futures, this rule is superseded by the option speculative position limit rule.
    #10     May 12, 2010