Wall Street Journal: How the Biggest E-Mini Futures Trade of 2016 Sent the Market Soaring

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A $1.8 billion futures trade that fueled buying in the U.S. stock market on Dec. 7 was the biggest transaction of its kind all year, according to an analysis, and comparable in size to the “fat finger” trade said to have set off the May 2010 “flash crash.”

The analysis by MayStreet LLC, a market-data firm, shows that an unknown buyer purchased about 16,000 E-mini S&P 500 futures contracts last Wednesday at 1:21 p.m. in New York.

“It was a massive trade and it happened quickly,” said Mehmet Kinak, head of electronic trading at T. Rowe Price Group Inc.

E-mini contracts are used by traders to bet on or hedge against future moves in the S&P 500 stock-market index, and large moves in the price of E-minis can have ripple effects in the stock market.

The trade occurred after muted morning gains by the stock market, which then soared in the afternoon after the transaction was made. The S&P 500 closed at a record of 2241.35 and then extended its gains into Thursday and Friday.

The trade was parceled into scores of individual transactions, but raw data show that all of them took place at the same nanosecond and fell within boundaries indicating where one trade ends and the next trade begins, according to the analysis. That is a strong indication they were all part of one big trade, MayStreet said.

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