CME Group: futures markets worked well amid plunge

By Ann Saphir

CHICAGO (BestGrowthStock) – CME Group Inc (CME.O: ) executive chairman Terrence Duffy said on Tuesday that futures markets worked well during Thursday’s market plunge, but an executive from Nasdaq OMX (NDAQ.COM: ) pointed the finger at a popular CME contract as a factor in the decline.

The conflicting accounts came ahead of the executives’ expected appearances before a panel of lawmakers later in the day.

CME, the world’s biggest exchange operator, said a review found no evidence of improper trading or mistakes by electronic traders, Duffy said in a summary of his prepared testimony.

“While futures markets functioned properly, it is clear that opportunities exist to enhance the functioning of securities markets and to better coordinate across securities, futures and options markets during times of market stress,” Duffy’s statement said.

Duffy called for circuit breakers and other tools to prevent runaway declines in individual stocks, but made no recommendations on specific actions to take in futures markets.

In his prepared testimony for the hearing, Nasdaq executive vice president Eric Noll, however, pointed to “unusually heavy” trading volume in the CME’s electronically traded E-Mini S&P futures contract for June expiration.

The contracts are used to protect against or bet on changes in the underlying S&P 500 group of stocks.

The trading in the E-Mini S&Ps occurred just prior to the sudden downdraft in the U.S. equities markets, and triggered a previously undisclosed 5-second trading “lock” in the contracts at CME, Noll said.

After the lock expired, trading in CME’s E-minis climbed rapidly, followed by a similar gain in equities, he said.

A CME spokesman did not immediately comment on Noll’s account.

In its summary of Duffy’s comments, CME did not release any details on trading in E-mini S&P futures, saying only that liquidity in the contracts surpassed that in related Spider exchange-traded funds, which are traded on securities markets.

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(Reporting by Ann Saphir; Editing by Padraic Cassidy)

CME Group: futures markets worked well amid plunge