Waddell & Reed Financial Inc
Waddell & Reed Financial Inc is a money manager.
According to a media report published on May 14, 2010, Waddell sold on May 6 of 2010, the day of the so-called "flash crash," a large order of e-mini contracts during a 20-minute span in which U.S. equity markets plunged, briefly wiping out nearly $1 trillion in market capital, the internal document from CME Group Inc said.
In a statement released May 14 of 2010, Waddell & Reed said that "on May 6, 2010, 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. Such trades often are executed in response to market activity, and are undertaken to protect fund investors from downside risk. We use futures trading as part of this strategy, broadly known as hedging. This is a longstanding and well monitored practice in certain of our investment portfolios. We believe we were among more than 250 firms that traded the "e-mini" security during the time frame the market sold off."
Further, the firm said in a letter to advisers that trades of the size the firm initiated on that date normally are absorbed easily in the market. The firm estimated that it was one of 250 firms engaging in e-mini trading during the market selloff. The firm said in the letter that as part of an equity hedging strategy, its managers used the e-mini S&P 500 index futures contract, which is highly liquid and widely traded. Waddell said its selling of the e-minis that day was just 1 percent of overall trading volume, or 75,000 contracts out of 5.7 million traded that day.
Products and Services
- Exclusive: Waddell is mystery trader in market plunge. Reuters.
- Press Release. Waddell & Reed.
- Waddell Defends Its Trades During Flash Crash. The New York Times.