CME Group: Futures market didn’t cause 2010 Flash Crash… we think

CME Group Inc (NASDAQ:CME), the world’s largest derivatives marketplace, has put out an interesting statement in light of the prosecution and possible extradition of Navinder Singh Sarao to the US.

The CME has long maintained that the cause of the 2010 ‘Flash Crash’, which on May 6 of that year saw the Dow Jones Industrial Average plunge roughly 1,000 points (about 9%) within minutes only to recover a large part of the loss in the hour that followed, was not caused (at least exclusively) by activity in the futures market, in a tail-wagging-the-dog fashion. However, the CME seems to feel compelled to now reconsider that position, in light of Mr. Sarao’s prosecution.

The CME’s statement reads as follows:

Nothing is more important to CME Group than the integrity of our marketplace. Following the Flash Crash on May 6, 2010, together with other regulators, we did a thorough analysis of all activity in our markets during the Flash Crash, and concluded – along with regulators – that the Flash Crash was not caused by the futures market. If new information has come to light, we look forward to reviewing it with the Commission. We fully support the CFTC’s actions to prosecute those who attempt to engage in fraud or manipulation. We are prohibited by law from releasing information about any individual’s trading behavior, including Mr. Sarao’s, so we are unable to comment further at this time.

To read the full CME Group statement click here.

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