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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 The orders would be placed and withdrawn in rapid succession using a customised computer programme, they allege", which sounds a lot like high-frequency trading.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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Hey, wait a minute!! I want a divorce!! ... you're not Clint Eastwood!!
(Score: 3, Insightful) by bradley13 on Sunday May 24 2015, @06:25PM
I don't know the answer to your question, but I'm going to guess that the answer lies in the algorithms used by the banks and investment houses. Likely they are stupid, look at the pending volume of orders, and change their strategy accordingly.
Just exactly why it should be illegal to trick stupid software? That is a completely different question
As far as I am concerned, the solution to this entire group of problems is very simple: Stock markets fund themselves off of fees. Their fees should change, to be in two parts:
First: cancelling an order should be expensive. Orders should be placed with the intent to execute them. While cancellation may sometimes be necessary, it should be expensive.
Second: an inverse exponential function of how long you have held an asset. If you bought a stock or derivative and sell it within the hour, their fee should be utterly punitive, maybe even the total value of the asset. Sell something you've held for months or years, no fee at all.
Liquidity is overrated - extreme liquidity it nothing but an excuse for turning an investment vehicle into a casino. That really needs to change.
Everyone is somebody else's weirdo.
(Score: 3, Insightful) by Justin Case on Sunday May 24 2015, @06:39PM
> guess that the answer lies in the algorithms used by the banks and investment houses. Likely they are stupid, look at the pending volume of orders, and change their strategy accordingly.
That would make sense. I'm wondering if someone more knowledgeable than either of us can offer another explanation.
> Just exactly why it should be illegal to trick stupid software?
Indeed, there should be a reward for separating stupid (people, software, corporations) from their resources as quickly as possible, to minimize the damage they can do. That's why I said I want to understand how HFT works before I can make a moral evaluation.
Those who just say "somebody who isn't me has money, therefore they must be evil" has a ridiculously simple view of the world, IMHO.
(Score: 0) by Anonymous Coward on Sunday May 24 2015, @09:57PM
The problem WRT the stock market is that these people are gambling with other people's money. Your 401k? Their customers' money? That's what they're gambling with; if they win, they pocket all the profit, but if they lose, the gamblers don't lose a thing, but the people who's money they're using end up losing their entire retirement fund.
(Score: 2) by Fluffeh on Sunday May 24 2015, @11:06PM
Indeed, there should be a reward for separating stupid (people, software, corporations) from their resources as quickly as possible, to minimize the damage they can do.
The problem in itself is that it's the "stupid" people who end up footing the bill when the smart people muck it up. All those banks that were bailed out... that's taxpayer money. All those massive losses of investments... that's retirement plans. Sure, a few folks here and there who had a lot of money lost it too - but insignificant sums compared to the losses worn by the general population.
I agree with the sentiment in your comment for the most part, but not when punishing the minority also means punishing the vast majority.
(Score: 0) by Anonymous Coward on Monday May 25 2015, @06:38AM
Well said. However the thing with a casino is, the house always wins. And since here the biggest players make the house, the rules will never change to include your reasonable changes.