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Okay, there are problems with the case but not the problems you mentioned. He had negotiated a credit line from Credit Suisse to the tune of 30million. He woul
by cloudjacker 10y ago
Okay, there are problems with the case but not the problems you mentioned.
He had negotiated a credit line from Credit Suisse to the tune of 30million. He would then use 30 million to open futures trades with a much much greater notional value.
His real positions would be in the hundreds of thousands long/short the market.
His credit positions would be a little deeper in the order book, knowing that other people and algorithms would front run his order because they think it is an indication of a big buyer or trend happening.
He'd close his real position at the better price to the people trying to front run him, for a profit. And simply remove the super big order from the order book.
This is spoofing
and yes this is what everyone else does.
He is being prosecuted for it.
During the flash crash, liquidity dried up and spreads got super big, front running algorithms were still responding to the spoofing and matching orders at really bad prices with wide spreads. It doesn't matter who "caused" it.
- MichaelGG 10y ago>front running algorithms Citation needed (and not the terrible Lewis book). He wasn't being front run. What you're describing is just called trading. Someone says they wanna buy a million shares of something, you guess demand is going up. Just because they use special hardware and react fast doesn't make them any different.
- cloudjacker 10y agoYour argument is based on whether I was being accusative in a legal sense. I was not, my use of front running was hyperbole. He took advantage of the predictable machine traders, it was a good strategy, if he wasn't the fall guy.
- akhatri_aus 10y agoDo you have any news articles pointing to the Credit Suisse credit line? I've been following this story since last year but didn't catch that one.
- cloudjacker 10y ago"nav sarao credit suisse" first result http://blogs.wsj.com/moneybeat/2015/04/22/flash-crash-trader-struck-agreement-with-credit-suisse/ http://blogs.wsj.com/moneybeat/2015/04/22/flash-crash-trader... I recall reading the charges from the government though, and I believe there it mentioned the size of credit line from Credit Suisse
- akhatri_aus 10y agoThey don't mention the figure of 30 million on there, is that from somewhere else?
- cloudjacker 10y ago> I recall reading the charges from the government though, and I believe there it mentioned the size of credit line from Credit Suisse