Market 'Flash Crash': 2 Key Points Emerging

Tuesday, 11 May 2010 | 5:46 PM ET

Gary Gensler, the head of the CFTC, is also testifying in the House of Representatives on the cause of last Thursday's plunge. The main points of his testimony:

1) futures had a much tighter bid-ask spread than the comparable ETF.

2) the exact cause of the plunge remains elusive

3) the CFTC is focused on on traidng in the S&P E-Mini futures contracts just prior to 2:40 PM ET that Thursday;

4) they are examing the top ten largest longs and top ten shorts in that contract.

Mary Schapiro, the head of the SEC, has also released her testimony:

1) No single event caused drop

2) No evidence of "fat fingered errror"

3) No unusual trading in Proctor & Gamble before the plunge

4) SEC considering "greater consistency in exchange practices" (i.e., uniform circuit breakers).

The two points around which agreement seems to be coalescing:

1) there was an unusual amount of sell-side volume in the S&P E-Mini contract just prior to 2:40pm ET, and

2) the lack of a uniform individual stock circuit breaker was an exacerbating factor in the decline.

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Companies in the News:



Goldman Sachs

JPMorgan Chase



Questions? Comments? tradertalk@cnbc.com

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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