Just when you lot idea fiscal rule couldn't instruct to a greater extent than expansive as well as incoherent , our Justice Department comes inwards to defend morons' right to herd.
As explained inwards the Wall Street Journal at to the lowest degree , Mr. Navinder Singh Sarao is immediately nether arrest , fighting extradition to the USA , as well as his work 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 reply to spoofing orders past times placing their ain orders? Why is it a crucial finish of police trace as well as populace policy to preclude Mr. Sarao from plucking their pockets? Is "herding trader" or "momentum trader" or "badly programmed high-speed trading program" or only uncomplicated "moron inwards the market" immediately a protected minority?
Why is Mr. Sarao existence prosecuted as well as non all the people who wrote badly programmed algorithms that were as well as then easily spoofed? If this caused the flash crash (how , non explained inwards the article) are they non as at fault?
I don't hateful past times this a defence of the crazy materials going on inwards high speed trading. As explained here , I retrieve 1 2d batch auctions are a much ameliorate marketplace structure. But the whole high speed trading matter is largely a response to SEC regulations inwards the outset identify , the social club routing rule , discrete tick size rule , as well as strict fourth dimension precedence regulation. H5N1 fact which volition belike non instruct into at Mr. Sarao's lawsuit (he doesn't appear to possess got billions for a settlement) as well as volition laissez passer on him niggling comfort inwards jail.
And mayhap , only mayhap , at that spot is something to a greater extent than coherent hither than the Journal lets on. I'll continue reading hoping to detect it as well as welcome comments who can.
H5N1 larger thought. We even as well as then actually desire to rely on regulators to spot all the problems of finance as well as continue us condom 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 as well as John Arnold , the origin of the inwards 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 reply to spoofing orders past times placing their ain orders? Why is it a crucial finish of police trace as well as populace policy to preclude Mr. Sarao from plucking their pockets? Is "herding trader" or "momentum trader" or "badly programmed high-speed trading program" or only uncomplicated "moron inwards the market" immediately a protected minority?
Why is Mr. Sarao existence prosecuted as well as non all the people who wrote badly programmed algorithms that were as well as then easily spoofed? If this caused the flash crash (how , non explained inwards the article) are they non as at fault?
I don't hateful past times this a defence of the crazy materials going on inwards high speed trading. As explained here , I retrieve 1 2d batch auctions are a much ameliorate marketplace structure. But the whole high speed trading matter is largely a response to SEC regulations inwards the outset identify , the social club routing rule , discrete tick size rule , as well as strict fourth dimension precedence regulation. H5N1 fact which volition belike non instruct into at Mr. Sarao's lawsuit (he doesn't appear to possess got billions for a settlement) as well as volition laissez passer on him niggling comfort inwards jail.
And mayhap , only mayhap , at that spot is something to a greater extent than coherent hither than the Journal lets on. I'll continue reading hoping to detect it as well as welcome comments who can.
H5N1 larger thought. We even as well as then actually desire to rely on regulators to spot all the problems of finance as well as continue us condom 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 most 250 days , important that he caused 250 out of the terminal 1 flash crashes. [my emphasis] I tin run across the defence strategy. When the authorities practiced is on the stand upwards , the defence volition become through every day. “You claim Sarao used layering on this twenty-four hr menstruum , correct?” “Yes.” “There was no Flash Crash on that twenty-four hr menstruum , was there?” “No.” Repeating this 250 times volition brand the causal connector betwixt his trading as well as Flash Clash appear really problematic , at best.Update 2: Reading diverse commentaries that I can't detect to advert whatsoever to a greater extent than , I realize that "front running" to a greater extent than than "herding" is the protected class. You "spoof" past times putting inwards a bunch of orders only exterior the electrical current spread. The algorithms that reply to that retrieve this demeanour agency or as well as then large orders coming , as well as then endeavor to forepart run those past times buying. They cross the spread to accept the little social club you lot lay on the other side. Or as well as then the even out goes. In whatsoever illustration , viewed as spoofers vs. front-runners it's harder even as well as then to possess got sympathy for the latter.
Update 3: Good Bloomberg View coverage from Matt Levine as well as John Arnold , the origin of the inwards a higher identify front-running observation.
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Finance
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