Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

2010 Flash Crash Arrest Motivated By Greed

admin by admin
May 4, 2015
in Uncategorized
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

by EconMatters, EconMatters.com

Whistleblower Program

The past week we have made markets safer by arresting the dangerous flash crash villain who was a threat to national security and the health of the entire financial market system. Like I always say when in doubt follow the money trail in identifying motives and what is really going on here in this Flash Crash arrest.

In this case there is this whistleblower who is trying to cash in on the U.S. Commodity Futures Trading Commission’s (CFTC) whistleblower program, created after the 2010 Dodd-Frank Wall Street regulatory reform bill which awards tipsters between 10 percent and 30 percent of the total sanctions collected if the government collects $1 million or more.

Small Fry

The trader Navinder Singh Sarao who traded from the suburbs of London has made an estimated 40 Million dollars in profits from trading over the time period in question with his questionable trading practices and the CFTC will go after the full amount. The whistleblower could net between $4 million to $12 million for his ‘original analysis’ of the 2010 flash crash depending on what the legal proceedings are able to claw back from the trader.

Read: October 15th Bond Market Crash Explained

It is easy to see how the DOJ got involved since they have been regularly involved in making high profile cases against Wall Street over the last several years. It is good for their visibility effort, and making a name for those involved in the department and enforcement function. The problem is that there is nothing ‘original’ in this analysis on behalf of the whistleblower, this type of high frequency trading market manipulation goes on every day in every financial market in almost every asset class across the broad trading spectrum. It has been outlined by everybody from Nanex, Zero Hedge, Michael Lewis and many others in the industry. Computer driven market manipulation strategies are so pervasive in financial markets, they are far worse today than the flash crash period of 2010, and incorporated not just by the HFT firms, but by the large financial institutions, hedge funds, market makers, and many other market participants.

Does the DOJ really want to go down this Rat Hole?

Literally the problem for the DOJ is that if this guy is guilty, then the DOJ has to arrest the entire financial community, because all the DOJ or CFTC has to do is pull up a Trading Dom (Depth of Market) price ladder in anything from bonds, oil to S&P 500 futures and spoofing and many other volume based manipulative trading practices are regularly occurring right out in the open on a large scale. The real indictment here is that the CFTC or the DOJ needs any type of original analysis to identify this type of illegal trading activity, as it happens right out in the open for everybody to see. You don’t even have to pull trading records to see it, it is just that blatant. It has definitely gotten progressively worse from the 2010 period. In fact, spoofing is so commonplace that market participants probably don’t even think a millisecond whether it is an illegal tactic to manipulate prices. Furthermore, the arrest for spoofing sure didn’t scare any firms from incorporating this spoofing strategy because it was happening every day last week, and as of Friday’s trading was as rampant as ever in Friday’s price action.

Read: U.S. Oil Glut: How High Can It Go?

Follow the Money Trail

Why go after this small trader? This frankly just shows the ignorance by the DOJ and the CFTC on this matter, they could go after Goldman Sachs, JP Morgan Chase and every other major financial institution for spoofing, as the practice has been adopted across the trading community as acceptable behavior. When the oil market has 8 or 9 Spoofing events going on at the same time, and the sizes and capital necessary to enact such strategies, it is pretty obvious that more than just a few high frequency trading firms are employing spoofing to influence market direction for profits.

Why go after 40 million from this small independent trader, this is peanuts for the DOJ, they could easily go after another 100 billion in fines from the likes of Deutsche Bank, UBS, Morgan Stanley, HSBC, Bank of America and the entire lot of the large financial institutions. I guarantee you traders at all the large financial institutions employ volume based and spoofing manipulative price action influencing strategies on a daily basis. It has just become that pervasive due to the advent of sophisticated computer programs and algo based trading programs. Why do you think Goldman Sachs went so ballistic over that proprietary trading program that the developer who left Goldman Sachs wanted to take with him at his next position? Most of the data represented on the price displays regarding bids and offers and volume is completely artificial and fake, created by computers for the sake of deception, and gaining an advantage; everyone knows this in the trading community. Nobody in the options community believes anything they see as to the posted bids and offers or contracts available to trade because these are all artificially computer driven facades meant to trick market participants and gain an edge in the markets.

Read : China Easing to Combat the ‘Darkest Period’ of 2015

Programming & Edges

The issue is that computers started taking over more and more of the everyday market making activity and trading volume responsibilities. As a result the traders and programmers constantly evolved more advanced trading algos in response to what other firms were doing in this area. It became an arms race where traders had more coding language books on their desks than any fundamental research data. The computer driven arms race is so pervasive in financial markets that if one applied the literal interpretation to spoofing which the DOJ seems to have taken the first step in enforcing. Then this includes even some sophisticated Inventory Selling algos employed by conservative market participants to counter high frequency trading ‘predatory’ algos from front running their exiting of large positions because these algorithms have become highly manipulative of the underlying price action in a given instrument. Everybody is trying to disguise what their true intentions are in financial markets these days, and the DOJ and CFTC it seems is so behind the curve that they jumped all over this small case like it was a goldmine landing in their lap. It could be a curse because now they could be tasked with doing something about this illegal practice that has been going on for over a decade!

Is the spoofing activity illegal because it was associated with a crash event, or is it illegal in and of itself? That is the real question the DOJ and CFTC needs to ask themselves. And if it is then literally you can run a simple trading algorithm filter on the historical trading data which is easily available and retroactively apply such large fines across the financial market community that the fines and settlements would be in the 200 Billion dollar range conservatively. Computer driven market manipulation trading programs and practices are incorporated by every large financial institution and have been the standard in the industry at an ever evolving rate of progress for the last 20 years!

Trillion Dollar Practice

The amount of money that has been taken out of the market based upon spoofing, volume manipulation and many other manipulative computer based trading strategies over the last decade is literally in the trillions and trillions of dollars. Did the CFTC and the DOJ just not have the expertise to identify that this was going on, were they locked into their own regulatory paradigms, and couldn’t see the larger forest right in front of their eyes and noses? Come on what did they think was going on in financial markets when a populous author like Michael Lewis happened to stumble across an idea for a book topic to cash in on the trend. You know by the time it gets on Michael Lewis’s radar screen it has been going on for a long time, and has gotten so pervasive that even financial journalists become privy to the fringe of the underlying activity.

Cab Driver starts giving

The DOJ literally could pay almost any trader a consultancy fee and he could pull up a Trading DOM, Options Chain, or Futures Market and point out illegal activity after illegal activity hour after hour in the trading day. It is just that out in the open, and blatant! And Michael Lewis was freaking clueless on the topic, the guy has literally no clue what is really going on in regards to the pervasiveness of modern computer driven manipulative trading practices and strategies. He literally is your typical populous author trying to cash in on a vague book idea for a mainstream audience that is shocked by his story.

Read: Michael Lewis is Right “Spoofing” Proves Market Rigged on Daily Basis

If the CFTC and the DOJ are serious the entire financial landscape of trading is about to change. Of this I have serious doubts, there is just too much money being made from market manipulation strategies, and this poor fall guy just happened to be at the wrong place at the wrong time.

Because if the DOJ and CFTC are going to be consistent, then they have to indict the entire financial community from the CME, Exchanges, Brokers, Institutions, Investment Banks, Hedge Funds, Management Funds and High Frequency Trading Firms.

It will be interesting to see if some of the large financial firms who have exposure in this area start reigning in traders and programmers in some of these spoofing and other computer driven manipulative trading practices. I bet half the upper management doesn’t even know that the traders at their firms are even employing some of these strategies. They only care about the bottom line profits of the trading group until investigators start asking for documents, trading records, and e-mails. But spoofing is so mainstream today that nobody seems to be worried about regulatory enforcement, and somebody is really out of touch. Either the DOJ & CFTC, or Traders are in for one major wakeup call!

Previous Post

Connecting Animals to the Cloud could Help Predict Earthquakes

Next Post

Breakout or Fakeout?

Related Posts

Gold Versus Bitcoin, Which Is A Better Investment In 2023?
Econ Intersect News

Gold Versus Bitcoin, Which Is A Better Investment In 2023?

by John Wanguba
March 28, 2023
World Bank Cautions Of 'Lost Decade' In Global Growth Without Drastic Policy Shifts
Business

World Bank Cautions Of ‘Lost Decade’ In Global Growth Without Drastic Policy Shifts

by John Wanguba
March 28, 2023
How Is The Banking Crisis Affecting Ripple’s XRP Crypto?
Economics

How Is The Banking Crisis Affecting Ripple’s XRP Crypto?

by John Wanguba
March 28, 2023
Virgin Orbit Extends Employee Furlough, Funding Talks Ongoing – CEO
Business

Virgin Orbit Extends Employee Furlough, Funding Talks Ongoing – CEO

by John Wanguba
March 28, 2023
Lebron James And Several Other Celebs ‘Effectively Wiped Out’ As Fitness App Tonal Loses 90% Value
Business

Lebron James And Several Other Celebs ‘Effectively Wiped Out’ As Fitness App Tonal Loses 90% Value

by John Wanguba
March 28, 2023
Next Post

Breakout or Fakeout?

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe FTX inflation investment market analysis Metaverse mining NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Gold Versus Bitcoin, Which Is A Better Investment In 2023?
  • World Bank Cautions Of ‘Lost Decade’ In Global Growth Without Drastic Policy Shifts
  • How Is The Banking Crisis Affecting Ripple’s XRP Crypto?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish