Alleged 2010 flash crash trader loses latest appeal against extradition to US Navinder Singh Sarao, the British trader accused of illicitly making $40m and causing a stock market "flash crash" in 2010, has lost his attempt to appeal against extradition to the US. Sarao is accused of 22 counts of wire fraud, commodities fraud, commodities manipulation and "spoofing" between 2009 and 2014, in addition to …
He certainly is. And that's because his real crime is embarrassing the Land of the Fries. Had he been a mere drugs dealer, or worse, your average investment banker, or somebody making a living writing HFT algos to skim pension funds and other long term investors, he'd be scot free.
It'd be nice if the British government would just tell the Yanks to fuck off and sort out some of the criminality and incompetence in their own back yard first, but no chance of that.
"It is alleged that he used bespoke software to allow him to place orders on the market long enough for everyone else's trading algorithms to see the trades and react, but not long enough for the trades to complete – a matter of a millisecond or two."
Isn't this exactly what was done by the major financial houses as described in Flash Boys by Michael Lewis. Which is why the IEX exchange was designed to negate such advantages as causes by the signal distance from the trading floors to the computer platforms being different depending on your location. iirc One enterprising soul put their computer right next door to the NYSE.
how it works, basically you place a large 'buy' and wait until the price goes up and then cancel the order. The cancel haven't yet been probagated to the market and you make a profit. Why aren't the Wall Street trading houses on trial with Sarao. Oh wait, is it because they own the politicians. And finally he wouldn't have been able to spoof the market if the trading algorithms hadn't been so easy to deconstruct.
It's exactly that. It's also something that you can see happen ~20 times a day in various markets. A mini crash every week or so. Prices being "forced" just before certain benchmarks are taken.
He got charged about 5 days before the statute of limitations kicked in. To ensure no-one else could get charged for the same crime.
His real crime is not having nearly enough lawyers and politicians on his payroll.
A long time ago I used to contribute as a developer to a stock trading system in Scandinavia. That system started out as a pure information system (trades were initially carried out on other platforms) and the stock exchange's separation of trading and information system was quite a headache for us back then.
OSE would happily report trades on one system, and about a half second later we would finally see that trade on the information system.
What was worse: The information system was on a separate network (of course), and it had its share of downtime. Thus users of our system stopped seeing information, and could only sit and observe as trades were still carried out elsewhere.
Speaking of the Oslo Stock Exchange, Norwegian authorities tried prosecuting someone for having "fooled" one of those trading robots (http://blog.cfelde.com/2010/08/warning-dont-do-hft-on-the-oslo-stock-exchange/). The case went nowhere of course. If you hook a buggy system up to the exchange, do not expect people to not try to give you a bloody nose.
If there is a problem here, the problem resides with the HFT systems. Either get off the potty or face the smell.
"how it works, basically you place a large 'buy' and wait until the price goes up and then cancel the order."
NoNoNo,the usual flash dealer waits until your pension fund places an order, gets its own order in beforehand and then sells to your pension fund at an inflated price. It's completely different, nobody looses money (it's just pensions), it's fractions of penny's only in any case, so it doesn't count (don't ask about the billion dollar profit), and what were we talking about anyways? Oh right, those rogue criminals who think you can make personal profit by cheating he system when you are only allowed to make corporate profit by such means.
@Schultz: You started out correct and then wandered off onto a rant.
A HFT sees your buy order come in, places his own buy order to the same amount, and then immediately sells it to you. Not exactly 100% ethical, but not illegal either.
What Navinder Singh Sarao is alledged to have done is to buy futures in a commodity. Then place lots of fake sell orders at different prices for that commodity so it appeared that there was an overabundence of supply. The price would drop and he'd sell his futures at a profit while cancelling the sell orders before they were filled. In short, his sell orders were fraudulent because there was never any intention to complete the sale.
While his competitors put their computers inside the building.
Yes this is fully automated. No humans involved. In "Flash Boys" it's clear HFT's will bid $m to put their boxen ever closer to the NYSE (and other exchanges) servers. They really will look for nS advantages.
This is why this story looks very suspicious. "Trading from his parents house." Bu***hit. A geosynch satellite would give a delay of greater than 230ms (and that's for the ludicrious straight-up-to-geo-altitude-and-back-down case). FO cables across the Atlantic will be 31% slower than the straight line distance at the speed of light. Call it 27ms. IOW between 10 000 and 100 000 too slow.
What I never bought was that someone from a crappy home link in London could get US trading data, process it and return orders before the heavy HFT systems of the big boys in the US did who sit pretty much on top of the trading systems.
That's simply physically impossible unless there was some wormhole between Hounslow and Wall Street, and I'm positive that would be incompatible with BT's VDSL offering.
It never stacked up, but I have the feeling it never had to be - they had to find some foreigner alien to blame because otherwise they'd have to admit the real cause was located in Wall Street itself. Better bang up someone whose country doesn't care about handing him off to the vagaries of the US legal system.
Just as sure as not being white and having a funny foreign name does not have anything to do with his not coming " ... close to satisfying the statutory test."
He probably has the wrong school tie and isn't a member of the right club, and doesn't have Asperger's**
** That's because only white people can have Asperger's; Asian people who are good with technology cheated by working hard in school.
...plea deal
"UK 'flash crash' trader Navinder Sarao pleads guilty in US"
http://www.bbc.co.uk/news/business-37932250
"Sarao agreed to pay the US government $12.8m (£10.3m), the amount prosecutors said he earned from his illegal trading.
He will be released on a $750,000 bond and will be allowed to return to the UK pending sentencing in the US, judge Virginia Kendall said."
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