China Futures Exchange Says Client’s Hedging Caused Flash Crash
- Sudden drop follows similar move in Hong Kong this month
- Futures exchange urges investors to pay attention to liquidity
What Caused China's Futures Flash Crash?
This article is for subscribers only.
An investor who used Chinese stock-index futures for hedging triggered a flash crash Tuesday, the China Financial Futures Exchange said.
Contracts on the CSI 300 Index due in June dropped by the 10 percent daily limit at 10:42 a.m. local time before recovering almost all of their losses in the same minute. The sudden drop was triggered by the unidentified trader’s order for 398 contracts at current market prices. They were filled consecutively, which prompted the broader selloff, the futures exchange said in a statement.