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CFTC Commissioner Bart Chilton on the agency’s investigation into oil’s sudden decline in price yesterday.
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Our let's talk oil prices they are extending their fall today after plummeting -- do you see this more than four dollars in a matter of minutes yesterday so.
We have the regulator who's investigating the trades behind the plunge he has a plan to help prevent future price spikes.
CFTC.
Commodities futures trading commissioner.
Bart Chilton joining me now all right a park three to see thank you for coming onto -- Shed light on what's really going on tell me about the investigation where it stands I know it's just 24 Roberts later but.
This was an unbelievably heavy trade and it -- the price -- so dramatically that people are wondering what happened do we know anything yet.
Well it it it occurred as you say Liz.
You know four dollars and a few minutes -- -- actually three dollars and one minute and whenever you see.
Markets moved that fast that quickly with a large volume I mean we're talking about going from about 500.
It trades to you know over 101501.
Minute 101000 the next.
Whenever you see that the of these high frequency traders the -- traders as far as -- call them.
Those -- the guys I want to look at and what I can tell you is that they work heavy in the market at that time I'm not saying -- done anything illegal we're still looking at -- -- but they were heavy in the market and you did see the price fall.
And that sort of stuff we look at to see if anybody was manipulating the market earlier you were -- talking about whether or not this was a eight a fat finger and and I don't think that's probably it because there were many traders in the market.
Liz that's what Jeff Flock percent from the floor of the CMB and and exactly and it was to a sustained it was over a decent period of time.
Again 1:53.
PM eastern time up 500 oil contracts were trading normal level.
What 54 just a minute later 121000.
500 so obviously something's happening there how would investigate part of market spasm like this where do you begin what -- you start looking for.
Well it's it's a normal -- Liz for us to try and get all the trading information and does start slicing and dicing it and our guys there.
Been working really hard doing that and that's why can tell you about that that the fat finger thing that I think -- is pretty much rule ruled out.
And I can also tell you that the -- traders were in massive amounts into the market at this time so if you start looking at who was doing what.
But there's also the link list between what was going on not just in that the west Texas intermediate that's WTI crude market.
The trades -- on nymex.
But also any relationship between what was happening in the IntercontinentalExchange.
Which -- -- In London and so those things may have some relationship and we're looking at they -- all of this stuff -- working.
In an appropriate sense with our -- Fellow regulars in the UK yeah.
You know we we have a -- chart here -- -- -- same same type of picture but if we work to compare it to what happened yesterday with west Texas.
-- pretty much the same maneuvering.
The -- traders these super fast high speed traders that you speak up.
Let's talk about them do they work on -- there was a rumor that perhaps the Obama administration would tap the strategic petroleum oil reserve.
I mean that that the administration -- absolutely not we're not discussing that right now.
But are rumours illegal if somebody starts to spread something one minute and that.
Spreads like wildfire gone for five under contract to 121500 contracts is -- something illegal about that especially if somebody's profiting always.
No no you know the futures markets are actually different in the equities markets so.
You know there's not even in our markets for example an insider trading ban you know if if you have inside information.
About -- you think something that's happening yeah you can trade on our market -- because they're trying to.
Predict what's happening in the future -- futures markets.
But rumors wouldn't move up prices like we saw yesterday Liz I mean no matter what rumor was out there that would be.
At that that's a huge price moves.
And one of the things that concerns me about the -- traders -- is that we continue to see these things this wasn't just a one off we -- natural gas where last period dropped 8% in fifteen seconds we -- and silverware dropped 12% in thirteen minutes.
We even -- our earlier.
This year where the price of crude dropped a 10% -- today.
But it's a stuff that happens in -- confined space that really draws our antenna off as regulators' -- I was gonna say despite a sense comes up there but at some point yeah.
And here you want these guys to register right I mean does that change anything about their behavior.
Well I think so I mean you know you you you can all we all assume that people will do.
I'm sorry could assume what people -- -- will do things but and until we're actually regulated you don't know so the cheat is currently aren't regulated they need regulated.
We need to ensure that their programs these super scary algorithmic programs that they actually test them.
Before they get put into the -- production environment and cause problems.
And we need third.
Eight kill switch in Casey's -- programs gulf barrel and are off to the races that they actually stop themselves -- -- that before they do damage to markets and more importantly to consumers.
Now that that -- and the tuxedo we have I don't think he's gone Farrell anytime soon but -- it's a very important important issue here part thank you.
Do us a favor when you get more information about what happened with a straight we'd love to have you back -- -- thanks very much any time Bart Chilton head of this.
