UPDATE 1-Regulator's 'flash crash' report falls short-CBOE
* 'It just doesn't add up' -CBOE CEO Brodsky
* Joint CFTC-SEC report highlighted actions of one firm (Adds comments by CBOE CEO, background on report)
By Jonathan Spicer
CHICAGO, Nov 4 (Reuters) - The head of the largest U.S. options exchange said a regulator report falls short of explaining what happened in the May "flash crash," adding to skepticism that has grown since it was released Oct. 1.
"We went on for months and months and still didn't know what happened," William Brodsky, chief executive of Chicago Board Options Exchange parent CBOE Holdings Inc (CBOE.O), told a Futures Industry Association conference.
The report's explanation of the May 6 crash "just doesn't add up in my view," he said on Thursday.
The 104-page report said a big computerized futures sale by a single money manager -- earlier identified as Waddell & Reed Financial Inc (WDR.N) -- sparked the unprecedented plunge in which the Dow Jones industrial average dropped nearly 700 points in minutes before sharply rebounding.
The report, issued jointly by the Commodity Futures Trading Commission and Securities and Exchange Commission, said the crash and lack of liquidity that afternoon was exacerbated by the rapid offsetting of positions by high-frequency traders, and by the overall crush of orders to sell-at-any-price. [ID:nN01141642]
Brodsky, who recently headed up the World Federation of Exchanges, criticized the report's "vague reference to a Kansas City firm (Waddell)," adding, "we need to know what happened across all markets" that day.
"We failed because it took so long to figure out what happened, and they never figured out what happened," he said of the CFTC and the SEC, which is expected to make further changes to the marketplace to avoid a repetition of the crash. [ID:nN28177251]
Over the last month, brokerage and alternative trading venue Instinet, as well as research firm Nanex, among others, downplayed the impact of Waddell on May 6. (Reporting by Jonathan Spicer, Editing by Maureen Bavdek and Matthew Lewis)