This report says the flash crash was caused by a single trade made by Waddell. Anyone have any thoughts on this?
http://www.reuters.com/article/idUSN3013208820100…
Apparently it was e-mini futures contracts that they sold all at once.
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Obviously it was all at once...that was a stupid thing to say.
Yeah, I'm not buying it. The system should be able to handle large orders, and I'm guessing that if it weren't for all the "me too" automated sales made by computer systems on the way down, even if the spark WAS Waddle, it wouldn't have happened. I guess what I'm saying is that the problem isn't the spark, it's that the system doesn't have enough stop gaps to prevent this sort of thing.
dunno with the way the greece situation was at the time and a certain trigger of volume going off like that i dont find it impossible to have happened.... perfect storm domino effect
I am going to outright say it. It's a bullshit report that the SEC made in order to divert attention from the real problems.
The above paragraph in particular indicates that W&R sold the e-mini's during the flash crash but does not indicate it caused it. Without the full report being available to read yet, I cannot comment much further than what is available for common knowledge. I mean, I'm not paying a consultant with Most Favorable Insider status at the Fed for my info, so I won't know until it's released to the public.
To cause a 700 point drop, however, W&R would have needed to trade significant volumes of ES to trigger that kind of drop. What I want to know is what they plan to say about the crashes in specific stocks, like Accenture. The Flash crash, in my humble opinion, was started in 3-4 stocks and systematically spread across the market. Trading the ES, by all rational measures, should not spark a major sell-off in 3-4 names as the ES represents the entire index. I still maintain my stance that this was an HFT incident, as this has happened a number of times in the last few months. Check out Tuesday's Apple trade. There was a volumeless $15 drop in the stock price at the open, bringing it to a daily low of $275 from an open of ~$293. This has happened in other stocks too, with far worse implications, especially for those lucky few who manage to get accidental fills, as I would expect the market to reverse any and all gains and screw you when you close out the position.
Monkeysama, the CFTC is more than capable of handling the supposed volume in question. The implied daily volume for that instrument is ~150 Billion USD, so that should not be an issue and I do not believe that Greece would have triggered that as well.
Short, Greece was a play that was predominantly based in the CDS space without much influence from the US Equity Markets, as everyone was more concerned about their ability to repay debt overall.
just a perfect storm on that day greased by high freq algos trading. i think we've pretty much agreed it wasn't one single order.
This clearly incorrect -- it was not a "perfect storm", which implies extreme unlikelihood. This is repeatedly happening, albeit to a lesser degree, to many other names as recently as this past week.
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