…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
“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.”
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.
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.
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.