Originally posted by AtW
View Post
May 14 (Bloomberg) -- Waddell & Reed Financial Inc., the mutual-fund manager started in 1937, said it didn’t intend to disrupt markets on May 6 when the plunge in stocks temporarily erased more than $1 trillion of value.
Waddell & Reed traded index futures contracts as “part of the normal operation” of its funds, according to a statement today from the Overland Park, Kansas-based firm. The firm said it believes it was among more than 250 firms that traded “e- mini” contracts during the time the market sold off.
The U.S. stock market, fueled by computer-driven trading, last week had its biggest intraday decline since the crash of October 1987. During the market drop, Waddell & Reed sold 75,000 e-mini contracts, which are tied the Standard & Poor’s 500 Index, Reuters reported today.
Gary Gensler, chairman of the Commodity Futures Trading Commission, had said previously that one sale was responsible for about 9 percent of the day’s volume in e-minis.
Comments by the CFTC and other regulators “indicate that we are a ‘bona fide hedger’ and not someone intending to disrupt the markets,” according to Waddell & Reed’s statement. “Like many market participants, Waddell & Reed was affected negatively by the market activity of May 6.”
Source: Waddell & Reed Says It Didn
--------
Ok, let's assume here they are telling the truth and they did not intend to disrupt the markets. It turns out then that some company that I never heard of before ever managed to disrupt the market so massively so quickly without even trying, clearly something is very wrong in the system if that happens?
This derivative bull tulip that allows firms to get massive leverage should have been banned long time ago - it simply should not be possible to buy or sell things that you either don't have cash to pay for or don't actually own outright by buying it from someone else before.
Now think what the guys who actually meant to influence market can do
Waddell & Reed traded index futures contracts as “part of the normal operation” of its funds, according to a statement today from the Overland Park, Kansas-based firm. The firm said it believes it was among more than 250 firms that traded “e- mini” contracts during the time the market sold off.
The U.S. stock market, fueled by computer-driven trading, last week had its biggest intraday decline since the crash of October 1987. During the market drop, Waddell & Reed sold 75,000 e-mini contracts, which are tied the Standard & Poor’s 500 Index, Reuters reported today.
Gary Gensler, chairman of the Commodity Futures Trading Commission, had said previously that one sale was responsible for about 9 percent of the day’s volume in e-minis.
Comments by the CFTC and other regulators “indicate that we are a ‘bona fide hedger’ and not someone intending to disrupt the markets,” according to Waddell & Reed’s statement. “Like many market participants, Waddell & Reed was affected negatively by the market activity of May 6.”
Source: Waddell & Reed Says It Didn
--------
Ok, let's assume here they are telling the truth and they did not intend to disrupt the markets. It turns out then that some company that I never heard of before ever managed to disrupt the market so massively so quickly without even trying, clearly something is very wrong in the system if that happens?
This derivative bull tulip that allows firms to get massive leverage should have been banned long time ago - it simply should not be possible to buy or sell things that you either don't have cash to pay for or don't actually own outright by buying it from someone else before.
Now think what the guys who actually meant to influence market can do
Leave a comment: