Inside the Flash Crash Report - a Counterpunch special report

[ensho]

http://counterpunch.com/


"Riddled With Inconsistencies ... and Wastes Precious Time on Illustrations Then End Up Telling Us Nothing We Didn't Already Know."


(I'm only posting a bit of the article because I'm not all that up on the stockmarket. posting this for those at DU that do know.)

-snip-

But here’s where the official theory comes apart: fourteen days after the Flash Crash, Terrence Duffy, the Executive Chairman of the CME Group which owns the Chicago Mercantile Exchange testified before the U.S. Senate’s Subcommittee on Securities, Insurance, and Investment of the Committee on Banking, Housing and Urban affairs that “Total volume in the June E-mini S&P futures on May 6th was 5.7 million contracts, with approximately 1.6 million or 28 per cent transacted during the period from 1 p.m. to 2 p.m. Central Time.” In other words, the government investigators are suggesting that a trade that represented 1 per cent of the day’s volume in a futures contract in Chicago and less than 5 per cent of contracts traded in the pivotal 1 to 2 p.m. time frame in Chicago (2 to 3 p.m. in New York) caused stocks in the cash market to plunge to a penny.

Of the 104 pages of the report, there is one sentence that is noteworthy:

“Detailed analysis of trade and order data revealed that one large internalizer (as a seller) and one large market maker (as a buyer) were party to over 50 per cent of the share volume of broken trades, and for more than half of this volume they were counterparties to each other (i.e., 25 per cent of the broken trade share volume was between this particular seller and buyer).”

-snip-
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[RandomThoughts]

1. Was the buyer and seller the same person?

Or same money?

[gratuitous]

2. So the price crashed due to some schmuck's sell off

Then revived due to some other shrewd investor's purchase? Well, I'm sure there's nothing else to see here. Case closed. The price is back where it was, so no harm, no foul. Let's all go back to talking about capital gains tax cuts and keeping the tax rate for the overrich down.