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Accused British "Flash Crash" Trader to be Extradited to the US

posted by martyb on Sunday October 16 2016, @12:53PM   
from the where-were-the-air-bags? dept.

Whoever writes:

Navinder Sarao has lost his appeal and is set to be extradited to the USA, where he faces charges with a possible maximum sentence of 380 years. He is accused of causing the "flash crash" in 2010, when the Dow Jones index dropped by 1000 points. He ran his trading from his bedroom in his parents' house and it is claimed that he made more than £30M (approximately $40M) in 5 years. His parents had no idea what he was doing, nor the scale of his income. He is accused of placing trades that he never intended to fill, so, to this naive person, it's hard to distinguish what he did from that of the large high-speed trading firms.

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Original Submission

• Re:Easy cure, of course (Score: 0) by Anonymous Coward on Monday October 17 2016, @05:27AM

  by Anonymous Coward on Monday October 17 2016, @05:27AM (#415105)

  HFT makes money by inserting itself between actual buyers and sellers. That is, folks who have or want to have a stock.

  No. HFT traders are actual traders -- they just work within a shorter time span and within tiny moves.

  HFT traders don't affect the mom and pop, buy-and-hold stock investors, except to increase liquidity, making it easier for mom & pop to exit their trade with more value.

  Also, most HFT is arbitrage, so it really doesn't change pricing as much as it eliminates market inefficiencies while increasing liquidity.

  To HFT, having a stock is like having a hot potato. They are not interested in buying something unless they are pretty sure they have a buyer. If there were no actual buyers and sellers, there would be no market making interest from HFT. So to say they make the market more liquid ignores the fact that they only do this when it is not needed.

  Of course, HFT traders want liquidity just like everyone else. Like most others, they can't operate effectively if there is no interest in a product.

  However, HFT (like all trading) definitely increases liquidity, and more liquidity is always helpful, even in the markets chosen by HFT traders.

  To say that they lower the apparent spread may be true,

  Yes. That is obvious. And "lowering" the spread means more liquidity and easier trades for all.

  but I suspect that they do not lower the spread between actual buyers and sellers. They like the spread, that is where they make their money.

  Huh? If the spread is narrowed, that helps everyone get more value out of the trades -- even for the market makers and arbitrageurs.

  I am not sure if most folks making assertions here are familiar with the actual realities of the markets.

  Parent