Plunge Protection Team: What They Do
What is the Plunge Protection Team?
The Plunge Protection Team (PPT) is an informal term for the Working Group on Financial Markets. The working group was created in 1988 by then U.S President Ronald Reagan following the infamous October 1987 Black Monday market crash. It was formed to re-establish consumer confidence and take steps to achieve economic and market stability in the aftermath of the market crash. The U.S president consults with the team during times of economic uncertainty and turbulence in the markets.
The Working Group on Financial Markets’ informal name “Plunge Protection Team” was coined and popularized by The Washington Post in 1997.
What does the Plunge Protection Team Do?
The Plunge Protection Team was initially formed to advise the president and regulatory agencies on countering the negative impacts of the stock market crash of 1987. However, the team has continued to report to various presidents since that stock market crash and has met various U.S presidents on important financial matters over the years.
The team was believed to be behind the rally in the stock market shortly after a hefty drop in the Dow Jones Industrial Average (DJIA) on February 05, 2018. As per some market observers, after the plunge, the market made a smart recovery in the following days, which may have been a result of heavy buying by the Plunge Protection Team.
Who is on the plunge protection team?
The Plunge Protection Team comprises several top government economic and financial officials. The Secretary of the Treasury heads the group, while the Chair of the Board of Governors of the Federal Reserve, the Chair of the Commodity Futures Trading Commission, and the Chair of the Securities and Exchange Commission, are also part of the team.
Why is the PPT secretive?
The Plunge Protection Team’s meetings or activities aren’t covered by the media, which gives rise to speculations and conspiracy theories about the team. The probable reason behind the secretive nature of its activities is that it reports only to the president. Some observers opine that the team’s role is not only limited to giving recommendations to the president; rather, the team intervenes in the market and artificially props up stock prices.
Critics of the group claim that the members connive with big banks and profit from stock markets by carrying out trades on different stock exchanges when prices decline. They then artificially prop up the prices as part of their market stabilization efforts and profit from their transactions.
When does/have the PPT meet?
Although very little has come out in the mainstream media about the group’s activities, there have been some instances when the team’s meetings were reported. For example, in 1999, the team proposed to congress to incorporate some changes in the derivatives markets regulations. The last reported meeting of the group, at the time of this writing in June 2022, was in December 2018 when Treasury Secretary Steven Mnuchin headed the teleconference with the group’s members. Representatives from the Federal Deposit Insurance Corporation and the Comptroller of the Currency also attended the meeting.
Before the teleconference that took place on December 24, 2018, the S&P 500 and the DJIA had been under pressure for the whole month. But after Christmas, the DJIA and the S&P 500 both recovered and reversed most of the losses in the next few days. Conspiracy theorists attribute the recovery and gains in the indices to the intervention by the Plunge Protection Team.
Final Thoughts
The Working Group on Financial Markets serves an important function: to advise the president on financial markets and economic affairs. Because the exact nature of the group’s activities or recommendations haven’t been made public, some critics of the group blame the group for market intervention and artificially propping up stocks’ prices. However, some market observers believe that the team’s quiet activities are excused as it reports directly to the president.
Key Takeaways [Updated May 2026]
- The “Plunge Protection Team” is the informal name for the President’s Working Group on Financial Markets, created by Executive Order 12631 in 1988 after the 1987 crash.
- Members are the Treasury Secretary (chair), the Federal Reserve chair, the SEC chair, and the CFTC chair — by statute, not coordinated trading desks.
- Its mandate is to enhance investor confidence and the integrity of US markets, not to directly buy stocks or futures. Direct equity purchases are not part of the documented toolkit.
- Activity tends to spike during disorderly declines (1998 LTCM, 2008 GFC, March 2020 COVID), with coordinated communication and policy rather than market orders.
- For traders, “PPT activity” should not be a thesis; price action, volume, and risk management still drive the trade — but it is useful background for understanding policy responses to fast crashes.
Frequently Asked Questions
What is the Plunge Protection Team?
The Plunge Protection Team is the informal name for the President’s Working Group on Financial Markets, established by Executive Order 12631 in March 1988 in response to the October 1987 crash. It comprises the Treasury Secretary, Federal Reserve chair, SEC chair, and CFTC chair.
Does the Plunge Protection Team buy stocks?
There is no public evidence that the Working Group directly buys stocks or futures. Its documented role is coordination, policy recommendations, and communication. Some commentators speculate about indirect intervention via primary dealers or central-bank counterparties, but the Working Group itself does not run a public trading book.
When was the Plunge Protection Team created?
It was created on March 18, 1988, when President Reagan signed Executive Order 12631. The catalyst was the October 19, 1987 “Black Monday” crash, in which the Dow Jones Industrial Average fell 22.6% in a single session — still the largest one-day percentage decline on record.
Has the Plunge Protection Team intervened in past crashes?
The Working Group convened during the 1998 LTCM unwind, the 2008 financial crisis, and the March 2020 COVID drawdown. Their actions in those episodes ranged from coordinating central-bank communication to advising on emergency lending facilities. None of those episodes included documented direct equity buying.
Should traders care about the Plunge Protection Team?
Mostly as context. PPT activity is a coincident indicator of stress, not a leading one — it tends to be reported alongside the bottoming process, not before it. Build a trade plan around price, volume, and your stop, and treat PPT headlines as scenery rather than signal.
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