London trader booked by CFTC

…for spoofing e-minis - when CME warned him back in 2010, he wrote to his FCM “just called” the CME and “told em to kiss my ass”. Pretty badass for an Indian guy I think

http://www.nytimes.com/2015/04/22/business/dealbook/trader-in-britain-arrested-on-charges-of-manipulation-that-led-to-2010-flash-crash.html?partner=rss&emc=rss

http://dealbreaker.com/2015/04/evidence-shows-alleged-flash-crash-trader-is-pretty-rad-bro/

PS: I didn’t know this is a criminal charge, I thought you get charged in civil courts

“Defendants modified a commonly used off-the-shelf trading platform to automatically simultaneously “layer” four to six exceptionally large sell orders into the visible E-mini S&P central limit order book (the Layering Algorithm), with each sell order one price level from the other. As the E-mini S&P futures price moved, the Layering Algorithm allegedly modified the price of the sell orders to ensure that they remained at least three or four price levels from the best asking price; thus, remaining visible to other traders, but staying safely away from the best asking price. Eventually, the vast majority of the Layering Algorithm orders were canceled without resulting in any transactions.”

looks like my afternoon is gonna be busy…

^

On that basis, he should face trial in stupidty courts first, how stupid do you really have to be to implement a textbook method of manipulating markets?

Layering has to be one of the most common concepts discused in trader registration exams, and quarterly compliance courses.

Stupid!

if he was registered as a Principle with NFA then fine. If he’s just some guy in his bedroom, then it should be the FCM.

Matt Levine looked at when the guy had his algo on vs. the timing of the Flash Crash. It seemed like he had it on at the start of the decline, but turned it off before things really got bad. I suspect it’s more than just this guy at fault. He probably still kicked it off though.

They still think that Kansas mutual fund company precipitated the crash. However, this guy and others probably exacerbated the decline.

Behold The Patsy: First Photograph Emerges Of The “Criminal Mastermind” Reponsible For The Flash Crash

http://www.zerohedge.com/news/2015-04-22/first-photograph-emerges-criminal-mastermind-reponsible-flash-crash

One of the worst areas of London to live in, directly under the flight path of planes landing at heathrow.

Given that it’s been 5 years since he made a few mil, I would’ve expected him to be living in Surrey with an Aston Martin parked up front.

Do you guys actually beleive this 1 person brought the market to it’s knees?

Clearly he couldn’t have been the only one, but do I really have to explain the impact that huge volume on the offer or bid side could have on the current price?

The most imporant thing to nail down is who did it first - if this guy did and then others joined in, then he is the ONLY one to be blamed. Others could’ve simply thought there’s a large institutional investor out there with real intentions.

And yes, even flashing that volume can move markets

Obviously, you don’t have to point elementary equation of the evidence presented.

The issue im hinting at isn’t about volume, or about ‘who did it first’ it’s about the root cause and can it happen again? There’s clearly something amiss in the market if 1 single trader can bring the entire market to its knees.

yea i dont believe this guy did it alone. mb he tricked all the algos out there lol

No

the guy is said to have made 1mio on this day. somehow (assume that means 500 contacts, trading through 40 points) i don’t think he did much wrong.

https://www.youtube.com/watch?v=E1xqSZy9_4I

making public every order placed, filled and cancelled would be a start.

^just 1 mil? I’m told the figure is ~40 mil

“Mr Sarao is alleged by US regulators to have made $879,000 on the day of the flash crash and $40m over the four years to 2014.”

http://www.independent.co.uk/news/world/americas/2010-wall-street-flash-crash-us-establishment-under-fire-for-not-acting-sooner-to-charge-accused-trader-10199859.html

Aah, i see