US regulators issued a 104-page report Friday that revealed that a single automated trade which began selling $4.1bn in futures contracts as a hedge, combined with the general nervousness in the markets at the time, resulted in almost $1 trillion being wiped off the value of US stocks in a 20 minute period on May 6th.
The company that initiated the trade was not formally identified in the report, although is believed to be asset management and financial planning firm Waddell & Read.
Here's some media comment on the subject:
'Using a simplistic manual trading strategy to input a very large order into an algo, with no price or time limits, is borderline irresponsible'.
John Jacobs, COO, Lime Brokerage (The Financial Times)
'I'm not sure it's appropriate to comment on a report that doesn't name us specifically, but it's clear we were one of many traders that day. We were merely trying to manage downside risk in our portfoilios'.
Roger Hoadley, Director of Communications, Waddell & Reid (Bloomberg)
'We have one firm...that according to the SEC really was the trigger of this whole cascade. When you consider the number of firms out there making trades the possibility this could happen again, in my opinion, is very high'.
Michael Yoshikami, Cheif Investment Strategist, YCMNET Advisors (The Financial Times)
'This report identifies what happened and reaffirms the importance of a number of the actions we have taken since that day.
'We now must consider what other investor-focused measures are needed to ensure that our markets are fair, efficient and resilient, now and for years to come'.
SEC Chair Mary Schapiro and Gary Gensler, chairman of the Commodity Futures Trading Commission (The New York Times)
'All you got here, five months after the fact, you have an analysis of 15 minutes of trading. If this were to occur again, it would take another five months to figure it out'.
Joe Saluzzi, co-head of equity trading, Themis Trading (The Wall Street Journal)
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