In a previous post I speculated about politically driven manipulation of online political futures markets. As I noted then, other bloggers also thought something was amiss.
Today’s Intrade press release acknowledges attempts at manipulation:
A wave of heavy selling hit the George Bush re-election contract on
Intrade Friday driving the market down to all time lows before recovering.
“Our exchange operations staff continuously monitors our markets and
reported that a very large sell order hit the Bush Presidential contract at
approximately 1:30 pm EST on Friday October 15th”, said Chief Executive
Officer John Delaney.
“The sell order caused the market to trade at new lows before
recovering to earlier levels. The exchange has more than 40,000 members,
after assessing there was no news to cause the decline, traders quickly
started buying and within 3 minutes the market fully recovered to price
levels seen prior to the sell order being executed” says Delaney.
Some question if the market can be manipulated with such heavy selling
“All emerging markets will experience volatility, we are gratified
that the market recovered so quickly and without any intervention on our
part. This demonstrates the market’s resiliency, that the Intrade exchange
is the destination for serious traders in political contracts and that the
utility of the market as a price discovery mechanism is firmly intact” says
Post-debate sell off hits Bush contract
The Intrade Bush contract has become the battle ground of wills between
a cadre of large, well financed rogue traders seemingly bent on driving down
the Bush re-election contract and a growing list of financial traders who
think they can predict the outcome of this election.
Some question if George Soros is behind these market moves.
[. . .]
And Don Luskin further develops his argument.
I have an increasingly strong feeling that Bush will win overwhelmingly.