Navinder Singh Sarao

[TechQuant]

Just a guy, trying to earn a crust and make a few bob. Is his skill appreciated? No.

It's all uphill I tell ya.

 

[TechQuant]

"CFTC director of enforcement Aitan Goelman said: "Protecting the integrity and stability of the US futures markets is critical to ensuring a properly functioning financial system."

I like to start the day with good old belly laugh.

 

[tomorton]

It would be nice to see a Director of Enforcement in the dock for leaving the burglar alarm switched off and the back door unlocked.

 

[Boilersuit]

WHat was reported in the press was utterly baffling.

Apparently he's been charged with "spoofing" and wire fraud too.

But how the hell is placing orders "market manipulation".
There was a vastly larger number of traders who could have called his bluff, if HE was trying to manipulate a market in that way.

Either the US is trying to suppress the truth. Or the press is reporting tripe.

Strange.

 

[Fugazsy]

Yes, I do not understand, how did he manipulate market from his parent's house?

spoofing? meaning placing a orders on the offer just to flip it on the last moment on the bid? Well, market movers do that every day.......not sure what is going on....

 

[Charles Bronson]

WHat was reported in the press was utterly baffling.

Apparently he's been charged with "spoofing" and wire fraud too.

But how the hell is placing orders "market manipulation".
There was a vastly larger number of traders who could have called his bluff, if HE was trying to manipulate a market in that way.

Either the US is trying to suppress the truth. Or the press is reporting tripe.

Strange.

I think its a case of the exchanges and larger firms protecting their own money. They probably do this all day long and every day.

I don't think one person has the power to move the markets in that way. He may have found a system that was costing the big players a lot of money. Legally there may have been nothing they could do about it. The crash was a way to create a major incident so they could get the authorities involved.

How does one place a fraudulent trade with a broker? It is the broker who maintains control over the funds.

Is spoofing wrong? Only because they say it is. Like Boilersuit says there are enough traders who can call his bluff. Maybe he was just taking advantage of events unfolding. I am sure traders have done this before and will continue to do so. I think Mr Singhs system was too much of a risk.

As traders we all know what we can and cannot do in the markets, we all know where the real power lies. Its not in my hands and its not in yours.

 

[Boilersuit]

You've only got to look at LIBOR rigging, forex rigging, Copper rigging, the Alpari debacle etc etc and now this.
Its a bit disconcerting that there seems to be one rule for these. And one rule for the others.

I'm now starting to wonder if there will be a fraud unveiled that will absolutely DWARF the above ones..Its only been speculated upon away from the mainstream press, but who knows. It reminds me of how MF Global was discussed as bankrupt years before it became clear in the financial press.

I wonder what will come out in the Sarao case...

 

[Atilla]

Seems system is not fit for purpose or traders have some strange concept of what is fair and how one should conduct them selves fairly as gentlemen often doooo when there are millions and billions involved... :cheesy:

I also concur with much of what has been said below.

Haggling, misleading, talking up features and benefits and talking down competition and bluffing are all part of the transaction process in the market place. Why should it be any different online?


Salesmen use pressure tactics all the time?
- This is the last one, next delivery two weeks away
- Discount only available if you place your order by end of month
- When booking aeroplane tickets online, cookies on PC inform sales of your repeat visits and offer same seat at higher price - even though 250 seats remain vacant
- When buying anything retail why are we not informed, how many items remain in stock

Online market place - how is it different to real market place?


Seems like a load of illogical nonsense to me and I can't get over the 5 year delay in trying to stop/catch this guy??? Why now and not before?


I find the Swiss bank misleading the market a much bigger scandal than this little guy.

On the contrary whole system is based on deceit, smoke and mirrors and daggers so it would seem! From, investment to central banks and now regulatory bodies acting on vested interests imho.

 

[Fugazsy]

http://www.bloombergview.com/articles/2015-04-21/guy-trading-at-home-caused-the-flash-crash

 

[Fugazsy]

http://www.bloombergview.com/articles/2015-04-21/guy-trading-at-home-caused-the-flash-crash

lol
From the FBI:

SARAO's use of the dynamic layering technique was particularly intense in the hours leading up to the Flash Crash. SARAO used the technique continuously from 11:17 a.m. until 1:40 p.m. SARAO began this cycle by placing the following five sell orders nearly simultaneously at approximately 11:17:38.782 a.m.: (1) 600 lots at $1,156.50; (2) 600 lots at $1,156.75; (3) 600 lots at $1,157.00; (4) 600 lots at $1,157.25; and (5) 600 lots at $1,157.50. At approximately 1:13 p.m., SARAO added a sixth sell order for 600 lots, bringing the total to 3,600 lots. The orders were replaced or modified more than 19,000 times before SARAO canceled them, without having executed any of them, at approximately 1:40:12.553 p.m.

 

[Fugazsy]

I admire the kid, a bit like Robin Hood.

 

[Atilla]

lol
From the FBI:

SARAO's use of the dynamic layering technique was particularly intense in the hours leading up to the Flash Crash. SARAO used the technique continuously from 11:17 a.m. until 1:40 p.m. SARAO began this cycle by placing the following five sell orders nearly simultaneously at approximately 11:17:38.782 a.m.: (1) 600 lots at $1,156.50; (2) 600 lots at $1,156.75; (3) 600 lots at $1,157.00; (4) 600 lots at $1,157.25; and (5) 600 lots at $1,157.50. At approximately 1:13 p.m., SARAO added a sixth sell order for 600 lots, bringing the total to 3,600 lots. The orders were replaced or modified more than 19,000 times before SARAO canceled them, without having executed any of them, at approximately 1:40:12.553 p.m.

My issue with this would be - well what are the other HFTs doing and how do their algorithms work?

Who's policing this business?

Perhaps there should be a time delay of 5 minutes for these orders before removal. I know that's a stupid idea but the alternative of allowing this facility and selling L2 market depth subscription to players has or IS a fundamental flaw.

Ban automated trading altogether or fix the flaw, but let's not all pretend and try and enforce that pretension.

This gentlemens agreement and self regulation stuff is fiction and detached from reality.

http://www.telegraph.co.uk/finance/...e-cracked-down-on-high-frequency-traders.html

 

[Splitlink]

A remarkable absence of gentlemen!

 

[Atilla]

A remarkable absence of gentlemen!

They are the ones with no shirt or ties left so get to play quietly outside

 

[tomorton]

Who's policing this business?

That's the key question.

Sarao broke the law. His actions help to undermine confidence in the market and without that, why would anyone invest in it? He is as dangerous as a terrorist.

But the far worse crime is the failure of the regulators to protect the market from this kind of abuse. He's not a Robin Hood or a genius, he's a failed con man.

The ease of his effort raises the question whether the regulators really want to eliminate this kind of thing or want it to continue - if its eliminated their organisations are redundant, if it continues, they can continue to claim fat salaries for running big staffs. The occasional minnow just helps them underline what a fine and necessary job they're doing. I have said before those suits should get 20 years apiece.

 

[Atilla]

That's the key question.

Sarao broke the law. His actions help to undermine confidence in the market and without that, why would anyone invest in it? He is as dangerous as a terrorist.

But the far worse crime is the failure of the regulators to protect the market from this kind of abuse. He's not a Robin Hood or a genius, he's a failed con man.

The ease of his effort raises the question whether the regulators really want to eliminate this kind of thing or want it to continue - if its eliminated their organisations are redundant, if it continues, they can continue to claim fat salaries for running big staffs. The occasional minnow just helps them underline what a fine and necessary job they're doing. I have said before those suits should get 20 years apiece.

Wondering if it can be policed?

Doubt the success they are having too. Don't know if you read the link with the many cases raised before. Some by big institutions like Barclays. However, no mention of GS or JPMs. I'm sure they are all at it.

Even traders - perhaps the honest ones are not happy.




The US prosecutes high frequency trader Michael Coscia, of Panther Energy Trading, for manipulation of commodities futures prices, mostly oil futures.

He alleged that Barclays duped investors by telling them its dark pool was a safe place to put their money, when in fact they were exposed to high-frequency trading "predators".

A class action lawsuit is filed against Barclays and 13 US exchanges for favouring high frequency traders.

The exchanges include the New York Stock Exchange, BATS Exchange, Nasdaq OMX and Chicago Board Options Exchange. Plaintiffs include four pension funds (two US, one Virgin Islands, one Swedish) and the city of Providence, in Rhode Island.

Exchange operators and Barclays are accused of giving high-frequency traders special access to exchange floors and enhanced data feeds, and letting them install computer servers near the exchanges' own.

The defendants have asked a judge to dismiss the lawsuit.



Three traders - William Braman, Mark Mendelson and John Simms - file a lawsuit against CME Group for allowing high frequency traders to gain improper advantage.



The Financial Industry Regulatory Authroity fines Trillium Brokerage Services (TBS) $1m for using an illicit high-frequency trading strategy.

TBS prop traders used layered, non bona-fide orders to obtain advantageous prices otherwise unavailable to them on 46,000 occasions.


With all these cases the amount and volume of work can't see how the system can be made to work when it is clearly open to abuse - even from a 2 bed semi in Hounslow...


Similar to allowing people to have nuclear reactors in their back yard and suggesting everyone adheres to or complies with health and safety rules. What does it matter you get one bad practitioner when the whole neighbour-hood suffers a loss.

If something can not be managed or contained then it has not been thought out and either needs to be retracted or modified.


Someone needs to take away the big boys toys imho.

 

[Boilersuit]

This is shocking. Firstly the claim that Narao is guilty of something. Secondly the outrageous decision to charge him. Ofcourse whilst infinitely bigger players get away with megafrauds every week.

Even a rookie knows that you shouldn't treat stop orders particularly reverently.
1stly much of the stop order discussion is rumours. 2nd, its very likely offset in the spot/futures/options market etc. 3rdly, a stop is only EVER relevant when its hit. Otherwise.... duhhhh ... it isn't a stop. Its merely a potential order.

All Sarao is saying "I will be forced to do this, if it hits this price. But probably won't if it doesn't".

Is that "spoofing" or cheating? Ofcourse not. To suggest otherwise is simply perverse. The ones who should be prosecuted are the idiots who dont understand stop orders.

 

[Boilersuit]

The only exception to the above I could think of is if the systems can be hacked. So the platform moves to trigger and fulfill a stop order. But trader can somehow bail out WHEN THE PRICE HAS BEEN STRUCK.

But even then, the case against Sarao looks utter bull****. Because he couldn't have caused such a big thing once, and never aain.

The shorter the timeframe, the more random/unpredictable aspects of the market will be. And the even less dependable the order book will be for trades.

Either way, lock up the prosecutors and the dummies who don't understand trading, instead.

 

[Fugazsy]

if he broke the law by teasing the market participant, why then when the market institution doing it, they are not breaking the law? I think that is the essence of the point.

 

[Fugazsy]

still have this book published in 1999: electronic day traders secret, it is an interview of a few traders at the time, they all stress the point in market makers to fade and flip from one side to other with the intent to deceive, apparently they never got into trouble....