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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 The orders would be placed and withdrawn in rapid succession using a customised computer programme, they allege", which sounds a lot like high-frequency trading.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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If we can ever make red tape nutritional, we can feed the world.
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(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.