The New York Times’s Edwart Wyatt and Graham Bowley followed up on Commodities Futures Trading Commission chief�Gary Gensler’s timeline of Thursday’s collapse in his appearance before the House Subcommittee on Capital Markets, when he noted that “one large participant initiated a single large transaction in the S&P e-mini contract,” a factor that may have precipitated the market rout.
The authors quote CME Group (CME), which owns the Chicago Merc on which the contract was traded, as saying it wouldn’t divulge the identity of the trader, but noting that it was a legitimate hedge, not a malicious act.
This follows the report yesterday by The Journal that Nassim Taleb’s Universa had taken a position shorting the S&P 500, though it’s not clear whether Gensler was referring to Taleb.
The Times’s Wyatt and Bowley note that Gensler, and SEC chair Mary Schapiro, offered lots of other factors that were baked into the market collapse, including the breakdown of the system by which major electronic exchanges route quotes to one another, suggesting the lone trader may in the end not have played the pivotal role.
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