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Nainder Sarao sits in jail because he cannot raise the £5M bail that is required for his release. He has apparently made millions while living in his parents' basement, but doesn't have access to the money because his accounts have been frozen. What is claimed by US authorities is that "... Mr Sarao placed "spoof" trades in E-Mini S&P derivatives in a bid to push the market in his favour. The orders would be placed and withdrawn in rapid succession using a customised computer programme, they allege", which sounds a lot like high-frequency trading. Perhaps his real crime was to copy the techniques of wealthy high-speed traders?
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UK Citizen in Jail for Causing "Flash-Crash", or Just High-Frequency Trading?
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belief, n:
Something you do not believe.
(Score: 5, Insightful) by Anonymous Coward on Sunday May 24 2015, @03:18PM
...which is what all HFTs do. So, where's the crime? If HFT is illegal, why aren't all HFT firms being shut down and their operators arrested? Is there some technical difference here that I'm missing between what he's doing and what HFTs do (besides not paying the government for the 'right' to manipulate the markets) because of oversimplification?
(Score: 5, Interesting) by n1 on Sunday May 24 2015, @03:36PM
I can only assume HFT is illegal, unless you're in the club of 'large financial institutions and their partners', then it's stimulating the economy and creating liquidity, helping the stock market and therefor the economy to reach all new highs.
Much like how insider trading is illegal, unless you're Goldman Sachs and JP Morgan, then it's your business model.
Don't you feel better now?
(Score: 2, Flamebait) by Dunbal on Sunday May 24 2015, @04:32PM
IT shouldn't be illegal. No spoofing in the world can force you to buy stock. If you're dumb enough to chase the price then you deserve what you get.
(Score: 3, Interesting) by kurenai.tsubasa on Sunday May 24 2015, @07:29PM
Have to agree here.
I know it would be a very bad thing short-term, but I'd like to suggest that when “flash crashes” happen that it should be illegal to hit the rewind button. Maybe long term if trillions of dollars of wealth could go up in smoke because of some algorithm somewhere, maybe, just maybe, folks might learn that gambling is a bad thing….
Just like I'd still rather be standing in line at a soup kitchen as long as the guy next to me was one of the assholes who turned the economy on its head in 2008.
I don't know. I can dream.
Capitalism? Invisible hand? Sure, there's a lot to that. Except the inevitable forces of power rear their ugly heads when the invisible hand is about to bitch slap a large swath of greedy, short-sighted, dimwitted investors who are supposed to be our “betters.”
(Score: 2, Interesting) by nitehawk214 on Sunday May 24 2015, @09:37PM
I would agree... if they put some kind of transaction fee on placing the spoof trades. Financial institutions get to rollback trades if they were placed in error too.
"Don't you ever miss the days when you used to be nostalgic?" -Loiosh
(Score: 2) by Mr Big in the Pants on Sunday May 24 2015, @07:48PM
I think the moral of the story is:
Learn your place slave!
If you have not worked out that this is a corporate run world where your expected role is to stay on the treadmill for as little as possible reward until you drop dead (preferably a few seconds after retirement) then you are a mouth breathing idiot...
(Score: 5, Informative) by n1 on Sunday May 24 2015, @03:49PM
Just to add to my previous comment:
Tim Worstall [forbes.com] says:
Nainder Sarao doing it however created instability and the supposed 'flash-crash'. I really don't think there's much more to it than if you're a TBTF or associated appropriately, it's business as usual. For the rest of us it would be 'fraudulently manipulating the markets'.
ZeroHedge has reported quite well on the hypocrisy of this situation after the arrest of Nainder Sarao.
http://www.zerohedge.com/news/2015-04-24/dear-cftc-here-todays-illegal-sp-500-spoofing [zerohedge.com]
http://www.zerohedge.com/news/2015-04-22/dear-cftc-market-manipulating-spoofing-taking-place-e-mini-just-today [zerohedge.com]
http://www.zerohedge.com/news/2015-04-28/dear-cftc-here-todays-illegal-spoofing-gold-futures [zerohedge.com]
(Score: 2) by darkfeline on Monday May 25 2015, @06:24PM
>The HFT guys are making money, yes indeed they are. But they’re making money in much smaller sums than the general investors in aggregate are saving through the collapse in spreads as a result of the extra liquidity. HFT, at least in normal market conditions, benefits the small investor most certainly, not costs her.
What kind of reality distortion field do you need to believe this? Money goes into the stock market, money comes out of the stock market. If I put in $5 and take out $10, those extra $5 dollars came out of someone else's pocket. If the big investors are making money, that money is coming out of small investors' pockets.
God knows we all of us have so much money that it's burning holes in our pockets, praise Wall Street for helping us out!
Join the SDF Public Access UNIX System today!
(Score: 3, Informative) by Anonymous Coward on Sunday May 24 2015, @03:50PM
Is there some technical difference here that I'm missing
The difference is that he didn't complete the orders., opening and then closing them before they were filled. He used them as a way to hack the trading algorithms of other people (computers) in the market.
I can't say if that rises to the level of illegality or not. The cynic in me says yes it is illegal but only if you get caught and enforcement is so lax that it takes a giant event like, say, a flash crash, to get someone interested in enforcement.
(Score: 5, Informative) by n1 on Sunday May 24 2015, @03:52PM
From one of the ZeroHedge links [zerohedge.com] I posted above:
(Score: 2) by Runaway1956 on Sunday May 24 2015, @03:59PM
That's what they think. How do they know that Sarao doesn't have all the components of a wireless computer embedded within his body? They'll have to encase him in a Faraday cage to stop him manipulating the markets!
(Score: 2) by DECbot on Sunday May 24 2015, @07:48PM
That or at least delete his cron tabs.
cats~$ sudo chown -R us /home/base
(Score: 1) by dingus on Tuesday May 26 2015, @02:15PM
I imagine they left his computer running, because it's been proven that police have no idea how computers work. They probably thought he was doing it by hand.
(Score: 0) by Anonymous Coward on Sunday May 24 2015, @08:13PM
That post is agreeing with me. Sure it is a defense of Sarao by saying it is common place. But that is what I said. You have to get caught and enforcement is so underfunded that nobody even looks without some gynormous event.
If you think that post is actually a defense of spoofing, re-read the first line, "6 years after we warned about the dangers from predatory HFT including such parasitic "strategies" as spoofing..."
(Score: 1, Interesting) by Anonymous Coward on Sunday May 24 2015, @06:46PM
Please stop posting about stuff you know little about. Many HFT traders do these sort of things.
Algo and HFT trading works even better for the favoured ones that get rollbacks when they screw up big time.