Regulators focus on e-mini trading in probe of big plunge

May 11, 2010 | By Jim Kim

The e-mini has been, without a doubt, a hit product for the Chicago Mercantile Exchange (CME news). It was originally aimed at individual investors but hedge funds (hedge fund news) soon made it a staple in their arsenal of short-term gains-generating tools. A lot of big-name hedge fund guys like to trade the e-mini for their own account.

Now the CFTC is taking a close look at the biggest e-mini traders in order to get to the bottom of the big plunge last Thursday. During the sell-off, most traders were active on both sides of the market. But the chairman of the CFTC testified that one big, as yet unidentified trader was on the short side only. That trader entered the market around 2:32 and exited around 2:51. Apparently, he fared well. This trader had a short position that represented on average 9 percent of the volume traded during that period. That's huge. So who was this? Stay tuned. At some point, a name will likely bubble forth. The CFTC is continuing to seek information.

For more:
- here's the article
- here's the testimony