A lot already has been written about today being the one year anniversary of the “Flash crash.” Most of the articles out there are throwing out a couple numbers and giving a perspective of whether changes made since then are having any sort of effect to prevent another “incident.” That’s fine, but sometimes it’s important to just go back and remember why this was a big deal. (more…)
It has to be tough being a high frequency trader (HFT) right now. Not only does nobody outside of the trading world know what you actually do for a living, but a number of those who do know question whether HFTs should even exist. What’s more, HFTs have quickly become the ultimate scapegoat for any trading problems that arise. The May 6 “Flash Crash” is a perfect example of the finger being hastily pointed in HFTs’ direction. (more…)
Not since the Warren Commission Report was released in 1964 has a governmental report been received with such skepticism as the report on the May 6 flash crash by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
At least a half dozen industry leaders have volunteered opinions on that report during my interviews for our Top 50 Brokers story and during public panels at the Futures Industry Association’s Futures & Options Expo recently held in Chicago. All of them doubted the conclusions of the report that placed the blame on a lone E-mini S&P trade by a mutual fund.
The investigation of the May 6 “flash crash” is centering on the concept of stub quotes. This is a relatively new practice that allows designated market makers (specialists) to technically meet their obligation to provide two-sided markets without actually doing it.
We noted on this page earlier that markets makers had appeared to disappear during the extreme move on May 6.
Sherron Watkins is famous for her memo about Enron’s questionable accounting. Her whistleblower status in helping call out the Enron bad boys is part of the legendary fall of the firm. This morning she spoke on a corporate governance panel at InsideCounsel’s Super Conference being held in Chicago. After her panel - in which she ended her remarks stating that if your CEO doesn’t love the company product, workers, business or industry, leave the firm - we sat down to discuss some thoughts on Enron, the markets and why she brings a healthy skepticism to the business. (more…)
