Market 'Flash Crash': 2 Key Points Emerging
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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