a good writeup on this complicated subject below. company settled for 1 million without denying or admitting the findings From Bloomberg, 17.10.2014 00:02:02 The gravy goes on the meat. One good general rule is that it's harder than you think it is to figure out what's market manipulation and what isn't. Trading a lot, cancelling a lot of orders, putting in orders or doing trades on both sides of the market, trading a lot right before a close or fixing -- all of those things could be signs of nefarious manipulation, or just normal risk management. No single event or pattern proves manipulation. You often need to look for subtle clues to figure out whether a trade is actually manipulative To read the entire article, go to http://bv.ms/1F6EBd2
LOL - nice picture. I completely agree with your post. One issue is that HFT promoters have muddied the waters as to what is illegal and what is not for many who do not understand the ins and outs of the market microstructure. I am still trading this market, still making (and sometime losing) money and if you are trading this market and look at the bizarre fills currently, you may agree with me that the market is completely broken right now compared to say the 1990s. Liquidity is suspect and is getting worse in my experience. I have discussed some of this with a name trader who agrees. That doesn't mean that it is all illegal trading, but some of it is for sure. Incidently manipulation of closing prices is nothing new. As I recall, one trader used to do it over a decade ago with nat gas futures until it was discovered that he controlled the market and the regulatory agencies stepped in. He blew up several billion in a hedge fund and was charged for manipulation. (Amaranth Capital) This gets into moral hazard as well.
The Flash crash revisited: http://www.zerohedge.com/news/2015-04-21/full-scapegoat-retard-trader-arrested-2010-flash-crash No serious trader that I know thought Wadell & Reed caused the flash crash since early on the blame fell on the opposite side of that order (poor absorbing liquidity) and most likely HFT lobbyist fees rose immediately after. HFT provides liquidity until it doesn't. We have a brittle specialist/ MM system or in this generation's lingo - antifragile. Could a new trading hedge could be VIRT puts instead of VXXs to hedge a severe selloff. Or maybe VIRT could hedge VXXs and never ever go down (except for 1 day out of 6 years). What a joke the market liquidity has become!