* '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 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.
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.
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