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Follow on Google News |  'Flash Crash', The Untold Story by Tradeworx's Manoj Narang, at High-Frequency Trading Leaders ForumWhat Really Happened on May 6th, The Day of the "Flash Crash": The Untold Story by Tradeworx's Manoj Narang, Available ONLY to Subscribers at UltraHighFrequencyTrading.com
For Mr. Narang, it is clear that high-frequency traders are not to blame for the market plunge; furthermore, he argues, human intervention exacerbated the crisis. "First of all, I will just reiterate that this crisis was precipitated by panic selling by humans. The reason why this happened was because was the market was in particular vulnerable state on May 6th. We just had had a huge run-up in the equities markets, we were in the midst of a 10% correction, even before the mayhem unfolded, and on top of that you had very vexing news coming out of Europe, lots of images on CNBC, people rioting in the streets in Greece, the prospects of the second phase of the crisis unfolding. In that sort of an environment, people tend to seed the markets with stop orders. That's what happened in 1987, that's what happened this time around. So, the market was ripe for a catastrophic event, because it was so saturated with stop orders, all it needed was a catalyst. And the catalyst occurred, according to a couple of Reuters reporters, because a large mutual fund complex, decided to do a $4.5B hedging transaction in e-mini futures contracts, which track the S&P 500 index, when the market was already in that vulnerable state. On an ordinary day, an order of that size, and that's a pretty substantially sized order, would definitely have had a ½% or 1% price impact. But on this day, when volatility was already elevated, and the market was just looking for a reason to take profits, it had an outsize effect, and very likely triggered the first wave of stops, which then turned into market orders, which then led to a gigantic spike in volume." The full transcript of the exchange between Mr. Narang and Scott Patterson, the reporter from The Wall Street Journal who wrote a groundbreaking article in High-Frequency Trading last year, explaining in comprehensive detail what really happened on May 6th, is available for UltraHighFrequencyTrading.com' subscribers, at http://ultrahighfrequencytrading.com/ High-Frequency Trading Leaders Forum 2010 DVD Video Package is produced by Golden Networking (http://www.goldennetworking.net), the premier networking community for business executives, entrepreneurs, investors and diplomats, founded by former McKinsey consultant and Columbia Business School MBA Edgar Perez. Upcoming Leaders Forums and Business Networking receptions include: • High-Frequency Trading Happy Hour, (http://www.HFTHappyHour.com), June 8th, New York City • Real Estate Leaders Forum 2010, "Successfully Investing in Distressed Real Estate Assets" (http://www.RealEstateLeadersForum.com) Panelists, speakers and sponsors are invited to contact GoldenNetworking.net by sending an email to eperez@goldennetworking.net. Golden Networking has been frequently featured in the press, including recent articles in The New York Times, "Golden Networking Helps Job Seekers Make Overseas Connections" # # # GoldenNetworking.net is the premier networking community for businessmen, entrepreneurs, professionals and diplomats, to experience what’s hot, new and next End
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