Blame the Market Plunge on Waddell & Reed Trader

Friday, May 14, 2010 , 3 Comments



Reuters is reporting that the mystery trader on the grassy knoll is, in fact, a Waddell & Reed-er who was innocently trying to hedge the firm's exposure. Using, uh, 75,000 e-minis.

The conspiracy theorists and Fedbashers already have a pretty good idea who was monkeying around in e-minis and it wasn't the traders but we'll keep that wild speculation to ourselves, tyvm.

Reuters:
A big mystery seller of futures contracts during the market meltdown last week was not a hedge fund or a high frequency trader as many have suspected, but money manager Waddell & Reed Financial Inc, according to a document obtained by Reuters.

Waddell sold on May 6 a large order of e-mini contracts during a 20-minute span in which U.S. equity markets plunged, briefly wiping out nearly $1 trillion in market capital, the internal document from CME Group Inc said.

Former Goldman Sachs lackey Gary Gensler of the CFTC said the trader's activity appeared to be just your average run of the mill hedging. Which makes sense as an explanation because, you know, normal hedging almost always causes a total market panic.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

3 comments:

Anonymous said...

The conspiracy theorists and Fedbashers already have a pretty good idea who was monkeying around in e-minis and it wasn't the traders but we'll keep that wild speculation to ourselves, tyvm.

a plausible explanation?

Yeah I wouldn't feed Ben Bernanke after midnight either...

Anonymous said...

the infamous fat finger strike JDA wants his phone number