Major securities exchanges and the Securities and Exchange Commission have begun a post-mortem review of Thursday’s stock market meltdown.
These are the facts of the meltdown that exchanges and regulators are reviewing:
Right before the stock market melted down, there was big trading in the Standard & Poor’s 500 E-mini futures contract.
The notional value of one E-mini contract is $50 times the value of the Standard & Poor’s 500 Index.
The bearish futures trading was noticed by the equity markets, and everyone started selling stocks because they thought the stock market was crashing, a senior exchange executive said.
“Whether there was an error, or someone panicking, or a fat finger. we don’t know yet,” an senior executive involved in the review said.
The Chicago Mercantile Exchange, where the E-mini contract is traded, is expected to soon issue a statement.
Update: CME Group issued the following statement today regarding rumors concerning erroneous or irregular trades by Citigroup Global Markets Inc. in CME Group stock index futures markets:
“While our policy is not to comment on individual participation in our markets, in light of volatile market conditions, CME Group confirmed that activity by Citigroup Global Markets Inc. in CME Group stock index futures markets today does not appear to be irregular or unusual in light of market activity today.”
Update 2: The SEC this evening issued the following statement:
“The SEC and CFTC are working closely with the other financial regulators, as well as the exchanges, to review the unusual trading activity that took place briefly this afternoon. We are also working with the exchanges to take appropriate steps to protect investors pursuant to market rules.”
“We will make public the findings of our review along with recommendations for appropriate action.”
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