Home Add to Favorite Contact Submit  
           29 March, 2024


    
Category:  Press » Finances

 

CME Group Statement on the Joint CFTC/SEC Report Regarding the Events of May 6

Popularity:
         Views: 1458
2010-10-02 05:50:59     
CME Group

CME Group supports the work of the Commodity Futures Trading Commission, the Securities and Exchange Commission and the Joint Committee on Emerging Regulatory Issues concerning the events of May 6, 2010. As the report details, fundamentally negative financial, economic and political events in Europe and elsewhere contributed to investor uncertainty and impacted participation and liquidity in all market segments at certain times that day.

Throughout the day on May 6, CME Group markets functioned properly. Our automated credit controls, order quantity limitations, stop and market order price protection points, price banding procedures, and stop logic functionality operated as designed and were effective in responding to challenging market conditions.

Futures and options markets are hedging and risk transfer markets. The report references a series of bona fide hedging transactions, totaling 75,000 contracts, entered into by an institutional asset manager to hedge a portion of the risk in its $75 billion investment portfolio in response to global economic events and the fundamentally deteriorating market conditions that day. The 75,000 contracts represented 1.3% of the total E-Mini volume of 5.7 million contracts on May 6 and less than 9% of the volume during the time period in which the orders were executed. The prevailing market sentiment was evident well before these orders were placed, and the orders, as well as the manner in which they were entered, were both legitimate and consistent with market practices. These hedging orders were entered in relatively small quantities and in a manner designed to dynamically adapt to market liquidity by participating in a target percentage of 9% of the volume executed in the market. As a result of the significant volumes traded in the market, the hedge was completed in approximately twenty minutes, with more than half of the participant's volume executed as the market rallied – not as the market declined. Additionally, the aggregate size of this participant's orders was not known to other market participants.

Additionally, the most precipitous period of market decline in the E-Mini S&P 500 futures on May 6 occurred during the 3½ minute period immediately preceding the market bottom that was established at 13:45:28. During that period, the participant hedging its portfolio represented less than 5% of the total volume of sales in the market.

Academic and empirical evidence has firmly established that stock index futures markets are significantly more liquid than alternatives, including broad-based index ETF markets. As a result, stock index futures markets typically function as the leading price indicator and fundamental broad-based equity market movements are generally first evidenced in CME's E-mini S&P 500 futures markets. The report also recognizes the inter-relationship of the E-mini S&P 500 stock index futures market and the highly correlated SPDR ETF markets.

CME Group supports all efforts to ensure market integrity and the protection of customer interests. We continue to advocate for the adoption of uniform procedures across all markets, and the highly fragmented cash securities markets in particular, in order to reduce the potential for market disruptions. In particular, we have urged regulators to:

Require uniform price limit policies across all equity and equity derivative markets.
Require the adoption of stop logic functionality or similar protocols to mitigate the impact of transitory liquidity gaps by briefly pausing the market. As described in the Report, on May 6th, CME's Globex stop logic functionality was triggered and trading of E-Mini S&P 500 futures contracts was paused for five seconds. This pause permitted market participants to provide much needed liquidity by entering, modifying or canceling orders, ultimately leading to the market rally that restored equilibrium in the equity markets that day.
Eliminate stub quoting procedures in cash equities markets whereby orders to purchase or sell valuable securities can be executed at a penny or a mere fraction of their true value.
Establish uniform and pre-established standards for busting or price adjusting clearly erroneous transactions.

CME Group will continue to work with the CFTC, the SEC and other exchanges and trading platforms and market participants to ensure the effective functioning of our country's world leading financial markets.

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (Nasdaq: CME) and its products can be found at www.cmegroup.com.

Specialized in: Cme Group - Cme - Cbot - Nymex - Manage Risk - Futures Exchange - Futures Trading - Trade Futures - Derivatives Trading - Derivatives Exchange - Futures Markets - Futures And Options Trading
URL: http://www.cmegroup.com/
Print press release      Bookmark this page
Related Press releases 
Investment And Wealth Creation (Popularity: ): This is because wealth building takes years of strategic financial planning as well as sustained investment and wealth creation efforts. At FBNQuest, we’re committed to helping our clients build and manage generational wealth through our excellent wealth advisory and management solutions. In this article, we will highlight the need for wealth planning and strategies you can leverage in wealth creation.Investment and Wealth Creation Wealth creation is a process of growing your ...
Goldsmith & Company: Leading the Way in Financial Services with Expert Chartered Accountants in North London (Popularity: ): London UK, (press.abc-directory ) 11 May 2023 - Goldsmith & Company, a premier accounting firm, is proud to offer exceptional financial services with their team of expert chartered accountants in North London. By delivering tailored solutions to help businesses and individuals navigate the complexities of financial management, Goldsmith & Company has become a trusted partner for clients seeking expert advice and support.In today's ever-changing financial landscape, it is crucial for ...
Atlas Insurance Agency Discusses Hawaii Commercial Property Insurance (Popularity: ): Honolulu, Hawaii ( press.abc-directory.com ) October 10, 2022 - Atlas Insurance Agency, a Hawaii property and casualty insurance agency, has recently delivered an article discussing the basics of Hawaii commercial property insurance. This new informational resource was written by the insurance agents at Atlas to provide business owners in Hawaii with information about business property coverage that is unique to their state. The Atlas team is made up of experienced ...
Georgia Business Insurance Agency Releases a New Educational Resource on Commercial Auto Insurance (Popularity: ): Alpharetta, Georgia ( press.abc-directory.com ) August 4, 2021 - Southern States Insurance has recently released a new educational resource that discusses commercial auto insurance and the details of coverage. The new blog is guided by the Georgia commercial auto insurance experts at Southern States Insurance who have extensive experience helping those in the commercial auto industry get thorough and comprehensive coverage.Southern States Insurance offers readers some valuable information that helps ...
FinAcc Global launches accounting services for telecommunication businesses. (Popularity: ): Arlington, Texas-- September 2, 2020 -- It has been an immense pleasure to proclaim that FinAcc Global, an accounting outsourcing company, launches specialized accounting services for telecommunication businesses. The outsourcing firm aims to deliver flexible and integrated finance accounting solutions that help the industry to overcome many challenges.FinACC Global presents comprehensive accounting services for the telecommunication industry with 100% data security and confidentiality. With the flexible engagement model and technology-enabled ...


Related Business 
Joint Pain Formula (Popularity: ): Finding an effective joint pain formula can be difficult task. To help determine the best joint pain formula, check out our latest report. We have examined the top joint formulas and come up with the best product available.
CME Search (Popularity: ): A CME locator for physicians to locate continuing medical education (CME) conferences, courses, and other educational activities.
Accounting Software Bangladesh (Popularity: ): Accounting software Bangladesh is free online accounting software. Ledger, Trail Balance, Income Statement, Balance Sheet, Cash/Bank Statement, Supplier/Customer Statement, Inventory Report, Purchase/Sales Report and much more reports Generate on .pdf/excel/html format.
Reality at the SEC (Popularity: ): An ex-SEC lawyer's views of what the SEC does and does not do for investors.
CME on Sleep (Popularity: ): CME on Sleep is dedicated to provide healthcare providers with online CME presentations, slides and the latest publications on sleep disorders.
CME Web (Popularity: ): Physicians can register online, take electronic CME tests, and receive feedback and credit in various specialty fields.
CMEMeeting - Continuing Medical Education (Popularity: ): Providing continuing medical education, medical continuing education, medical CME, live CME conferences, online CME courses, physician education as well as CME education for nurse practitioners, physician assistants and other healthcare professionals. Book your continuing medical education conference online today!
Valley Home Educators (Popularity: ): A Christian homeschool support group for families in Harrisonburg and Rockingham County. Group has a constitutional statement of philosophy and a statement of faith.
Woodbridge Foam Partner (Popularity: ): Woodbridge FoamPartner is a joint venture between FoamPartner Group based in Europe and the Woodbridge Group based in North America. This joint venture combines the foam production capabilities and technologies of the FoamPartner Group and the Woodbridge Group.
CME Courses (Popularity: ): Offering a free, searchable database of continuing medical education (CME) and medical conferences for physicians.