It wasn’t a hedge fund, a proprietary trading desk at an investment bank or a rogue trader that may have been the key trigger behind the “flash crash,” one-thousand-point drop in the Dow.
Rather, it may have been a futures index trade by none other than Overland Park, Kan.,-based
A
Without naming the trader or their affiliation, Gensler told Congress: “One of these accounts was using the e-mini contract to hedge and only entered orders to sell. That trader entered the market at around 2:32 and finished trading by around 2:51.”
Waddell & Reed released a statement to The New York Times confirming it traded stock index futures that day as a hedging technique—but denying those trades set off the downward spiral in the Dow: “On May 6, as on many trading days, Waddell & Reed executed trading strategies, including index futures contracts, as part of the normal operation of our flexible portfolio funds. Like many participants, Waddell & Reed was affected negatively by the market activity of May 6.”
The CME and CFTC declined to comment to NYT.