UK 'flash crash trader'

[NicD]

This has to be the 'story' of the week.

This chap apparently lives in Hounslow, with his mom and dad, but wiped billions off the markets back in 2010.
Running some direct access trading software, incredible story.
Looking at his responses, he sounds barely literate, but clearly one smart guy.

Supposed to have made $40 million dollars altogether. ha ha, still living with his mom.

Just been granted bail at £5 million
http://www.express.co.uk/news/uk/572174/FBI-US-sto...
http://in.reuters.com/article/2015/04/22/flashcras...

[NicD]

Pretty valid comment:
'Marcus Stanley of Americans for Financial Reform, a campaign group, said Mr Sarao’s arrest highlighted the weakness of regulation and fragmented markets.

“If your kid is playing around in your house and the floor collapses, is the problem that the kid was jumping up and down or that your house was built badly? You should have a structure that should withstand this kind of thing,” he said.'
http://www.ft.com/cms/s/0/afbb9b44-e8db-11e4-b7e8-...

[NicD]

http://www.bloomberg.com/news/articles/2015-04-22/...

[NicD]

The US authorities have had nearly five years to investigate, so i would be surprised if the prosecution is not in order.
They also have securities laws with teeth, unlike the pathetic regulation in the UK.

This chap appeared to have direct access c/o Credit First Swiss, who would have agreements in place not to enter fraudulent trades (trades they have no intention of honouring) or to manipulate the market.

The two questions I have are; where are the profits and who will play him in the (yet to be announced) film?

[NicD]

Love the bit that he still lived with his mum so he didn't have to admit to having any dosh. Tight git.
Its stashed in the Caribbean apparently, wonder if he has, or needs to declare the income.[url]

a bit of a fibber, who treats the regulators for fools
|http://thumbsnap.com/RcCQA1f0[/url]

Edited by NicD on Thursday 23 April 21:16

[NicD]

Just read that he did not raise bail. Maybe doesn't want to bring the funds over from the tax haven.

[NicD]

Scuffers said:

Driller said:

So there's an artificial and virtual money system where people make more of this virtual money by manipulating things on their computer screens, this guy finds a slightly quicker way of manipulating the digits and they take exception to this and arrest him and put him on trial?

It's a crazy world.

that's actually not far off....

Actually, its not even close if you can be bothered to read the detail (I cant be bothered to explain but it is all in the links above)
The trades were fraudulently submitted (as the Exchange has rules) and that is why he has been charged.
In his defence, it seems others do the same.

[NicD]

ReallyReallyGood said:

He even got technical assistance from his clearer on how to implement an order type, that cancels-if-close, i.e. if you are on one side of the orderbook and the other side gets within a threshold, it pulls the order. So effectively, putting in trades that are engineered never to trade, creating a false market.

No doubt they'll get in trouble too.

Edited by ReallyReallyGood on Sunday 26th April 09:23

I love his BS to the FCA - 'point and click', haha

[NicD]

Driller said:

Rules eh? You mean he pushed his binary code digit 2nm too much to the left and the umpire gave him a red card?

He created a false market, can you understand that?
It is serious st.

[NicD]

HMRC will want to talk to him about the offshore accounts

[NicD]

Chim said:

This might be a stupid question, but surely you have to own the stock in the first place before you can actually put it up for sale. If this is the case he must have owned one hell of a lot of stock in order to impact the market to this degree. If this is not the case surely the obvious answer is that you must actually own something before you can actually put it up for sale in the first place.

You can buy (long) or sell (short) the contracts at your whim.

What you can't do is place thousands of orders just out of reach of the current price to create the illusion of lots of sellers (or buyers) and cancel them as the market price gets close to your offer.

Its called fraud (market abuse).

[NicD]

Chim said:

So you can actually put on order in to sell stuff you do not actually own. This seems like a kinda stupid system. If they join the rest of us in the real world and are only allowed to sell stock they actually own the the problem goes away

The practise is given some kind of cover by stock owners (or more likely, custodians) loaning it out to the shorters.

This is interesting also:

'During the flash crash, Navinder Sarao apparently used Jon Corzine’s now defunct MF Global to place orders and clear trades. Why didn’t MF Global see what he was up to, or at least call him to ask him about it?
There’s now a big business on Wall Street of firms renting out their HFT infrastructure to prop shops.'
http://www.iol.co.za/business/international/brit-f...

[NicD]

Looks like a good defence to me, but in any case, just to keep up to date:

A British financial trader accused of helping trigger a multibillion-dollar US stock market crash from his London home is due to appear in court on Wednesday after failing to raise the cash needed to make bail.
Sarao is facing 22 charges including wire fraud, commodities fraud and market manipulation, which carry sentences totalling a maximum of 380 years.

[NicD]

Right, he finally coughs to the gains, I would think HMRC will be inquiring as he seemed to be trading as an occupation -

'Hound of Hounslow' accused of helping cause £500billion financial flash crash is freed on bail after admitting he has £30million in assets'

Read more: http://www.dailymail.co.uk/news/article-3198391/Ho...