The market tumbled on August 24, after the “black monday” in China. The Dow Jones dropped 1089 points intraday. Usually the “designated market makers” (DMM) at the Big Board take care of a fair and orderly market. In times of turbulence, there’s a fast market rule where the market makers can duck the regular trading rules – the rarely used “NYSE rule 48”.
Messy market opening
However, even during a wild selloff there can be discussion about where the stocks should be priced. IMC Financial Markets is a DMM on the NYSE after buying the unit from Goldman Sachs early 2014. Something went wrong in KKR with IMC as DMM. Right after the opening IMC allowed the stock to trade 35% lower, which doesn’t classify as fair or orderly.
KKR considering hiring another market maker
Then again, somebody must have entered a market sell order in the panic opening. Probably somebody managing other people’s money. Anyway, KKR is considering ditching IMC as the market maker and hire another. The SEC is rumored to be investigating. Read the full post by Charlie Gasparino at Fox Business.
Rumors from China
China is rocking the world’s markets. Trading in China mainland also gives some regulatory risks. When authorities ban selling of stocks and futures, you could face difficulties hedging positions. Especially as the market dropped quitte a bit.
Rumor has it IMC and Optiver incurred massive losses when hedging positions wasn’t possible anymore. Selling was prohibited. Even worse, offices may have been raided and traders arrested. Couldn’t verify both rumors (my friends in China don’t return my calls), but given this kind of news it wouldn’t surprise me.
Update: The day to day trading operations in China could continue, so the story about massive losses due problems with selling stocks seems unlikely.
Finally, an interesting job opening worth mentioning. Found by someone in the comments, this great job opening for people who can’t sleep at night.
The company is called Geneva Trading, but is based in Chicago and has got nothing to do with Switzerland. Reminds us of this great job opening at IMC three years ago. But hey, at Geneva Trading you could eventually make promotion to the daytime shift. Hope your friends still know you after spending years in the darkness.