WADDELL & REED Financial, a brokerage and mutual-fund firm, has been named as the mystery trader that sold a large amount of futures contracts during the 6 May stockmarket slide.
Without identifying the firm, Commodity Futures Trading Commission chairman Gary Gensler said the trading was one of many factors that contributed to the Dow Jones Industrial Average’s nearly 1,000-point intraday decline.
Reuters news service said Waddell sold a large order of e-mini contracts during a 20-minute span in which US equities markets plunged, briefly wiping out nearly $1 trillion in market capital. It quoted from an internal document from Chicago Mercantile Exchange parent CME Group.
The e-minis are one of the most liquid futures contracts in the world, providing holders exposure to the benchmark Standard & Poor’s 500 Index. The contracts can act as a directional indicator for the underlying stock index.
Waddell said in a statement: “On May 6, as on many trading days, Waddell & Reed executed several trading strategies, including index futures contracts, as part of the normal operation of our flexible portfolio funds.”