UK Trader Fined 60,000 Pounds For Outsmarting Algos

The banksters and government puppets hate competition…

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UK Trader Fined 60,000 Pounds For Outsmarting Algos:

Yet another UK trader is being punished by overzealous regulators for an accomplishment that should instead have earned him accolades: Outsmarting the machines.

In a case that echoes some of the circumstances surrounding the scapegoating of former UK-based trader Nav Sarao, former Bank of America Merrill Lynch bond trader Paul Walter has been fined 60,000 pounds by the FCA for a practice that regulators call ‘algo baiting’.

Algorithm baiting is similar to spoofing – a practice that has been banned by stock-market regulators as those markets have embraced high-frequency trading practices that have broken markets and made them more vulnerable to this type of manipulation. But fixed income markets, like the Dutch loan market Walter is accused of manipulating, have been slower to embrace HFT-type trading. Because of this delay, Walter is a pioneer. Using BrokerTec, a popular fixed-income trading platform, Walter would place a bunch of bids for a given bond, triggering trend-following algos to follow suit. Then he would quickly cancel the bids. Here’s a more complete explanation per the Financial Times. 

Read moreUK Trader Fined 60,000 Pounds For Outsmarting Algos

“If You Get Enquiries Just Obfuscate And Stonewall” – How Barclays Rigged The FX Market For Seven Years

“If You Get Enquiries Just Obfuscate And Stonewall” – How Barclays Rigged The FX Market For Seven Years:

Back in May we first introduced our readers to the FX manipulation practice known as “last look.” Wait, what’s that? This is what we said:

The last look practice is a legacy of over-the-phone currency trading, when traders would take a final check of the market before executing an order. It has survived even as foreign-exchange trading moved onto electronic platforms, leaving banks with the option to back out of an order after it was accepted by a client.

Read more“If You Get Enquiries Just Obfuscate And Stonewall” – How Barclays Rigged The FX Market For Seven Years

‘Project Omega’ – Why HFTs Never Lose Money: The Criminal Fraud Explained

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“Project Omega” – Why HFTs Never Lose Money: The Criminal Fraud Explained (ZeroHedge, Aug 13, 2015):

Two weeks ago, without knowing the details of the most recent market-rigging and frontrunning scandal involving “alternative” market veteran ITG’s dark pool POSIT, which issued a vague 8-K it would settle with the SEC for “irregularities”, we explained what we thought had happened:

ITG had an in house prop trading group, or “pilot”, which operated for nearly two years, whose only signal was client order flow, which it would frontrun, and make millions in profits. In other words, once again precisely what we have claimed since 2009. But oh yes, not everyone is guilty of such manipulation. Only Liquidnet… and Pipeline… and ITG… and countless other ATS and HFT firms for whom clients are better known as either “easy money” or muppets.

And yes, we get the “trading experiment” narrative: calling it “criminal market manipulation and order frontrunning scheme” just does not sound like something the Modern Markets Initiative would spend millions of dollars to get Congressmen to agree on.

It turns out we were spot on, the only thing we missed was the name of this market manipulation exercise. Now, thanks to the SEC, we know: “Project Omega” (or as it was also correctly dubbed here the “criminal frontrunning scheme“) is how ITG dubbed its secretive prop-trading desk whose only purpose was to frontrun clients.

Here are the details for all you suckers who still read the HFT apologists and believe the bullshit that all these algos do is provide liquidity, when in reality all the really do is frontrun your orders, assuring them of 6 years of trading without a single day’s loss (or in the case of Virtu, one trading day loss). From the SEC:

Read more‘Project Omega’ – Why HFTs Never Lose Money: The Criminal Fraud Explained

Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The “Mass Manipulation Of High Frequency Nerds”

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Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The “Mass Manipulation Of High Frequency Nerds” (ZeroHedge, April 23, 2015):

There are several notable items in Bloomberg’s comprehensive overnight summary of the epic humiliation America’s market regulators are about to undergo, complete with yet another round of theatrical Congressional kangaroo courts, which will lead to a lot of red faces, a wrist slap or two and maybe even the termination of one or two lowly employees and… nothing else.

Because what difference does it make?

At this point only a bottom-up overhaul can “fix” the fragmented, broken market which by definition can only come after the next market crash, one which will promptly be blamed on HFTs (which leaving the central bankers unscathed).

Back to the Bloomberg piece in which we first discover that it wasn’t even the CFTC that, 5 years later, “figured out” the flash crash was one person’s fault:

Read moreWhy Sarao Is The Flash Crash Patsy: He Threatened To Expose The “Mass Manipulation Of High Frequency Nerds”

Australia Regulator Furious As Central Bank Decision Leaked To HFTs For Third Time

Australia Regulator Furious As Central Bank Decision Leaked To HFTs For Third Time (ZeroHedge, April 6, 2015):

For the third month in a row, FX ‘traders’ in AUD “guessed” the Reserve Bank of Australia’s decision in the seconds before it was released to the public. Aussie regulators, seemingly furious at the blatant-ness of the front-running, confirmed they will be investigating the price spike overnight

SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin

SkyNet Is Almost Sentient: HFTs To Start Trading Bitcoin (ZeroHedge, April 6, 2015):

As noted earlier, with equities now a barren wasteland of volume (and liquidity), the last remaining HFT master (of whale order frontrunning) has been forced to go to those asset classes where organic flow is still abundant such as FX, courtesy of central banks engaged in global currency wars. However, HFTs realize it is only a matter of time before FX order flow also dries up as central banks take their trade away from public venues (and dark pools) and as such are always looking for new, untapped markets. One place where they are about to land according to the WSJ, with hilarious consequences sure to follow, will be the one place that HFTs should have felt at home from the very beginning: bitcoin.

Flash Boys’ Michael Lewis Is Right ‘Spoofing’ Proves Market Rigged On Daily Basis

Michael Lewis is Right “Spoofing” Proves Market Rigged on Daily Basis (ZeroHedge, March 14, 2015):

Accordingly, Michael Lewis is right markets are rigged, but he really is underestimating the extent of market manipulation, financial markets really are the wild west, investors should always be wary of how they are being taken advantage of in financial markets. The phrase Caveat Emptor ‘Let the buyer beware’ applies here.