Systemic Leverage: BlackRock Calls For Pulling The Plug On Stocks To Prevent Big Drops






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It doesn’t surprise me that BlackRock would propose pulling the plug on the NYSE and related derivatives markets in the event of a big drop in prices.   BlackRock is the firm who’s co-chairman has running around DC with sacks of cash lobbying to make sure that derivatives will bailed out by the taxpayer.

Why?  Because BlackRock is the biggest participant in this:

The IMF calculates that there is around $1.5 trillion in embedded leverage in U.S. bond funds through derivatives, which could unwind dramatically if the Fed’s normalization process provokes liquidity shocks.   IMF Derivatives Warning

I find it hysterically ironic that the fund management firm whose CEO Larry Fink argued with Carl Icahn that there’s plenty of liquidity in the system to absorb a hit to the credit markets is now proposing to “unplug” the exchanges if stocks drop – make no mistake, this proposal was in BlackRocks mind at all when the S&P 500 was moving parabolically higher:

The fund company is proposing a three-part cure: the whole $23 trillion market should
automatically come to a halt if a significant number of shares stop trading; venues should use the same triggers to suspend trading throughout the day; and rules on when to pause securities should apply equally to shares, listed options, futures and exchange-traded products.  – 
BlackRock Calls For Halting Stocks    Perhaps this should be BlackRocks new marketing campaign:   “WHEN IN DOUBT, PULL IT OUT”


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