Just when yous idea fiscal rule couldn't larn to a greater extent than expansive in addition to incoherent, our Justice Department comes inward to defend morons' right to herd.
As explained inward the Wall Street Journal at least, Mr. Navinder Singh Sarao is similar a shot nether arrest, fighting extradition to the US, in addition to his concern ruined, for "spoofing" during the flash crash.
What is that? The Journal's beautiful graph at left explains.
The obvious question: Who are these traders who response to spoofing orders past times placing their ain orders? Why is it a crucial destination of constabulary in addition to populace policy to foreclose Mr. Sarao from plucking their pockets? Is "herding trader" or "momentum trader" or "badly programmed high-speed trading program" or simply unproblematic "moron inward the market" similar a shot a protected minority?
Why is Mr. Sarao beingness prosecuted in addition to non all the people who wrote badly programmed algorithms that were in addition to thus easily spoofed? If this caused the flash crash (how, non explained inward the article) are they non every bit at fault?
I don't hateful past times this a defense forcefulness of the crazy materials going on inward high speed trading. As explained here, I hollo back i 2nd batch auctions are a much ameliorate marketplace position structure. But the whole high speed trading affair is largely a response to SEC regulations inward the outset place, the gild routing regulation, discrete tick size regulation, in addition to strict fourth dimension precedence regulation. Influenza A virus subtype H5N1 fact which volition in all likelihood non run inward at Mr. Sarao's trial (he doesn't appear to possess got billions for a settlement) in addition to volition laissez passer him piffling comfort inward jail.
And maybe, simply maybe, in that location is something to a greater extent than coherent hither than the Journal lets on. I'll proceed reading hoping to uncovering it in addition to welcome comments who can.
Influenza A virus subtype H5N1 larger thought. We yet actually desire to rely on regulators to spot all the problems of finance in addition to proceed us prophylactic from to a greater extent than crashes?
Update: Craig Pirrong excellent commentary here via a goodness FT alphaville post. Great quote:
Update 3: Good Bloomberg View coverage from Matt Levine in addition to John Arnold, the root of the inward a higher identify front-running observation.
What is that? The Journal's beautiful graph at left explains.
The obvious question: Who are these traders who response to spoofing orders past times placing their ain orders? Why is it a crucial destination of constabulary in addition to populace policy to foreclose Mr. Sarao from plucking their pockets? Is "herding trader" or "momentum trader" or "badly programmed high-speed trading program" or simply unproblematic "moron inward the market" similar a shot a protected minority?
Why is Mr. Sarao beingness prosecuted in addition to non all the people who wrote badly programmed algorithms that were in addition to thus easily spoofed? If this caused the flash crash (how, non explained inward the article) are they non every bit at fault?
I don't hateful past times this a defense forcefulness of the crazy materials going on inward high speed trading. As explained here, I hollo back i 2nd batch auctions are a much ameliorate marketplace position structure. But the whole high speed trading affair is largely a response to SEC regulations inward the outset place, the gild routing regulation, discrete tick size regulation, in addition to strict fourth dimension precedence regulation. Influenza A virus subtype H5N1 fact which volition in all likelihood non run inward at Mr. Sarao's trial (he doesn't appear to possess got billions for a settlement) in addition to volition laissez passer him piffling comfort inward jail.
And maybe, simply maybe, in that location is something to a greater extent than coherent hither than the Journal lets on. I'll proceed reading hoping to uncovering it in addition to welcome comments who can.
Influenza A virus subtype H5N1 larger thought. We yet actually desire to rely on regulators to spot all the problems of finance in addition to proceed us prophylactic from to a greater extent than crashes?
Update: Craig Pirrong excellent commentary here via a goodness FT alphaville post. Great quote:
The electrical load alleges that Sarao employed the layering strategy close 250 days, pregnant that he caused 250 out of the terminal i flash crashes. [my emphasis] I tin run into the defense forcefulness strategy. When the authorities adept is on the stand, the defense forcefulness volition larn through every day. “You claim Sarao used layering on this day, correct?” “Yes.” “There was no Flash Crash on that day, was there?” “No.” Repeating this 250 times volition brand the causal connector betwixt his trading in addition to Flash Clash appear really problematic, at best.Update 2: Reading diverse commentaries that I can't uncovering to get upwards whatever more, I realize that "front running" to a greater extent than than "herding" is the protected class. You "spoof" past times putting inward a bunch of orders simply exterior the electrical flow spread. The algorithms that response to that hollo back this behaviour way simply about large orders coming, in addition to thus effort to front end run those past times buying. They cross the spread to possess got the little gild yous set on the other side. Or in addition to thus the storey goes. In whatever case, viewed as spoofers vs. front-runners it's harder yet to possess got sympathy for the latter.
Update 3: Good Bloomberg View coverage from Matt Levine in addition to John Arnold, the root of the inward a higher identify front-running observation.
