Q http://www.wallstreetandtech.com/co...ows-and-doing-the-right-thing/a/d-id/1264691? Since the traumatic Flash Crash of 2010 we have witnessed the implementation of circuit breakers, the elimination of stub quotes and jawboning of market makers to provide liquidity when it's against their best interest. But we have not seen any major market structure changes or rule modifications, and certainly nothing radical proposed by the commission of either regulator. UQ
oh man, I cancel orders all the time. That's all I do most of the time. And I am just a little podunck peon smalltime retail trader. I aint trying to spoof anybody, how can I? My positions are so small. Yet I need to cancel all the time, just to find that good price I am willing to pay. And you want to charge me for that? And for what reason? Just because it doesn't affect you?
I think you have this wrong. I'm pretty sure the only thing that was automated was the layering that stayed away from best bid/ask. The actual trading was done manually. You can find this in the documents. I doubt he back tested any of this.
What do you mean he caused front runners to play into his resting orders? How does that make someone a front runner?
I don't believe true HFTs are showing huge size like this. These are algorithmic traders, but probably not HFTs. It is true that HFTs are canceling a lot of orders. Especially market making algos. It is not to spoof, it is to try and remain as market neutral as possible. And when you are constantly adding and subtracting to your overall position, the by product is a high cancel rate.
If Sarao is being prosecuted because a large percentage of his orders were never meant to be filled, then all HFT operators should be jailed for 1000x lifetime sentences. Clearly there is a double standard for Sarao vs. HFTs.
First of all. Firms and people that participate in HFT are running all sorts of algos. You cannot lump all together. Those that are showing orders with no intent of getting execution should be stopped. Plain and simple. However, most "HFT" firms are not doing this. There is a big difference between making markets with orders on both sides of the bid/offer and some guy showing huge size on only the sell side and 99% of the time moving out of the way.
Statistically speaking there is no difference. If an HFT cancels a large percentage of its orders, it should be prosecuted just like Sarao.
This guy isn't being prosecuted just for canceling orders. He is being prosecuted for a multitude of reasons. I suggest reading the filings.
I've read the filings. If Sarao is guilty of the charges, then HFT firms are just as (if not more) guilty. There would be an easy way to get rid of this type of behavior, but the problem is that it would regulate away HFTs. So instead the regulators try to crack down on people who are exploiting the very loop holes that HFTs are, but they don't crack down on HFTs themselves. Double standard.