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UK Citizen in Jail for Causing "Flash-Crash", or Just High-Frequency Trading?

posted by n1 on Sunday May 24 2015, @02:11PM   Printer-friendly
from the justice-is-blind dept.

Whoever writes:

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 The orders would be placed and withdrawn in rapid succession using a customised computer programme, they allege", which sounds a lot like high-frequency trading.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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  • (Score: 3, Informative) by Anonymous Coward on Sunday May 24 2015, @03:50PM

    by Anonymous Coward on Sunday May 24 2015, @03:50PM (#187176)

    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.

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  • (Score: 5, Informative) by n1 on Sunday May 24 2015, @03:52PM

    by n1 (993) on Sunday May 24 2015, @03:52PM (#187177) Journal

    From one of the ZeroHedge links [zerohedge.com] I posted above:

    As you can see the vast, vast majority of ES contracts just before lunch today was cancelled without ever resulting in a single trade.

    And, we are confident, since Mr. Sarao is currently either in custody or on bail, without access to the internet, one can't blame today's massive E-mini spoofing on the flash crashing mastermind.

    • (Score: 2) by Runaway1956 on Sunday May 24 2015, @03:59PM

      by Runaway1956 (2926) Subscriber Badge on Sunday May 24 2015, @03:59PM (#187179) Journal

      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

        by DECbot (832) on Sunday May 24 2015, @07:48PM (#187317) Journal

        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

          by dingus (5224) on Tuesday May 26 2015, @02:15PM (#188027)

          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

      by Anonymous Coward on Sunday May 24 2015, @08:13PM (#187327)

      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

    by Anonymous Coward on Sunday May 24 2015, @06:46PM (#187269)

    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.