3 ms·

I think he was making the point that if something is permitted by the "rules of the game", then by definition, it cannot be a violation of the rules. And in the

by ryandvm 12y ago

I think he was making the point that if something is permitted by the "rules of the game", then by definition, it cannot be a violation of the rules. And in the case of financial transactions APIs, the rules should exist as application logic. So if you're not supposed to place and immediately cancel an order, it should simply not be possible. I could certainly believe that if it was one of the large HFTs doing this, they would have had the necessary wheel-grease to not get in trouble...

kasey_junk 12y ago
Placing and immediately canceling an order is fine and allowed (though doing that too much is penalized for other reasons). Spoofing is pulling them out in a coordinated fashion before they can be put at risk with no intention of them ever trading. The problem is that an api that prevented that would also prevent legitimate cancels that would have side effects that could be bad (ie making it riskier to make markets and therefore increase the bid/ask spread). Spoofing is about intention. Intention cannot be determined by algorithm (yet). Also to your point about a big HFT not being subject to this. Allston trading is a large HFT market maker that is currently in arbitration over spoofing.