So as soon as the Sarao story dropped in the media, I had 4 journalists contact me attempting to find out if what he did was possible & if so - how could 1 trader be the causation factor for such a huge crash?... Is this just a cover up for someones fat finger? Why did it take 5 years to uncover him and not 5 minutes? Why was he allowed to take money from his broker?...... What did he actually do wrong? ... 350 years for making money trading the Markets??? WTF!
Nick Neeson (Ex-Bearings Bank "Rogue Trader" said "No Trader comes into the market to lose money")....Fact is - NAV Beat the system!
This week has been pretty monumental with regards to authorities "stamping out" (scapegoating) high-frequency traders subject to risk-management algo blips (on the broker/bank side).. With a view to possibly deterring a lot more HF traders & funds.... These modern day Robin Hoods are a risk to huge institutions and the general order of the markets (is what is likely to be said in Court).. However, with the dynamics of an ECN pool & given available market-depth... Their still lies a huge loop-hole which brokers/banks aim to hedge against.
An IOC order is pretty common among API HF traders and 19,000 orders in a blink of an eye is not really that rare (or unheard of) amongst UHFTs.. HF firms have been making money via these widely available strategies for years. However, this is what strikes me..... Nowadays, (and even back in 2010)... Large institutions have been paying £Millions to Nerds to design risk management algorithms to protect their liquidity pools from being hit..... So why did this not trigger with Nav?
Another Fact : Nav was based in London... Connecting into NY Servers (presumably).... There is inherent latency involved here in terms of speed of ticket travel from Server-Server (unless he has the worlds best VPS service).... Why is this not accounted for?
Another Fact : Nav was based in London... Connecting into NY Servers (presumably).... There is inherent latency involved here in terms of speed of ticket travel from Server-Server (unless he has the worlds best VPS service).... Why is this not accounted for?
We call them "Pirates" in the Broker world as over the past 2-3 years it is has been extremely hard to cater for their strategies... as they aim to continuously hit stale prices with the view of arbing feeds (slower vs faster) & making exponentially high returns in short periods of time... (i.e. News Traders or other latency based strategies).
Below is a trading statement of one such client (latency based arbitrage trading - Ultra High Frequency Trading)... THESE GUYS EXIST in numbers (albeit declining)...:
There are many others like this..... So how can they get away with this?
I will leave this questions up to the #FBI
Signing out on a sad week for Traders.
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