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CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

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Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#11

Post by arcticbull »

smabie wrote: post #9
lordnacho wrote: post #3

As a trader, that does look really bad. These people know that the market looks at the orders to guess the state of supply and demand. The penalty looks big but it's over an 8 year period. It's not exactly a secret that some market participants work out some kind of imbalance measure, and of you've ever implemented a system like that, like I've done, it will have crossed your mind that you could shove a load of order…

In crypto spoofing is pretty prevalent. There are even tier 1 tradfi market makers who heavily engaged in not just spoofing but quote stuffing as well across crypto markets. It's annoying to see, but not a big deal per se: your order book imbalance features just get weighted less heavily and you move on. ofc spoofing is illegal in tradfi, but if it wasn't, I kind of doubt it would even matter: market participants wou…

> In crypto spoofing is pretty prevalent.

It's completely legal. If big financial institutions would risk fines and prosecution to do this is a market where it's illegal, what on earth makes people think it wouldn't happen in markets where it's legal?

> There are even tier 1 tradfi market makers who heavily engaged in not just spoofing but quote stuffing as well across crypto markets.

I assume you're alluding to Cumberland/DRW?

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#13

Post by runeks »

b8 wrote: post #10

I wonder how they spoofed market trades though. It's possible to do it with crypto before the transaction is able to be verified. Alas, JPMorgan Chase will just eat the cost and continue to do sketchy stuff. All the most banks do similar sketchy stuff. That's why credit unions (CU) were made and why I bank with a CU.

They didn’t spoof trades. They placed orders without the intent of trading anything.

> The order finds that, from at least 2008 through 2016, JPM, through numerous traders on its precious metals and Treasuries trading desks, including the heads of both desks, placed hundreds of thousands of orders to buy or sell certain gold, silver, platinum, palladium, Treasury note, and Treasury bond futures contracts with the intent to cancel those orders prior to execution.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#14

Post by andylynch »

lordnacho wrote: post #3

As a trader, that does look really bad. These people know that the market looks at the orders to guess the state of supply and demand. The penalty looks big but it's over an 8 year period. It's not exactly a secret that some market participants work out some kind of imbalance measure, and of you've ever implemented a system like that, like I've done, it will have crossed your mind that you could shove a load of order…

Yes - you're thinking of Navinder Sarao, the so-called 'Hound of Hounslow', held at least partly responsible for the 2010 flash crash.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#15

Post by arcticbull »

runeks wrote: post #13
b8 wrote: post #10

I wonder how they spoofed market trades though. It's possible to do it with crypto before the transaction is able to be verified. Alas, JPMorgan Chase will just eat the cost and continue to do sketchy stuff. All the most banks do similar sketchy stuff. That's why credit unions (CU) were made and why I bank with a CU.

They didn’t spoof trades. They placed orders without the intent of trading anything. > The order finds that, from at least 2008 through 2016, JPM, through numerous traders on its precious metals and Treasuries trading desks, including the heads of both desks, placed hundreds of thousands of orders to buy or sell certain gold, silver, platinum, palladium, Treasury note, and Treasury bond futures contracts with the int…

> They didn’t spoof trades. They placed orders without the intent of trading anything.

That's the definition of a spoof trade. [1]

> Spoofing is a form of market manipulation in which a trader places one or more highly-visible orders but has no intention of keeping them.

[1] https://www.investopedia.com/terms/s/spoofy.asp

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#16

Post by olalonde »

arcticbull wrote: post #7
nnx wrote: post #6

Earlier quoted context omitted.

On the other hand, it will always happen given the incentive. JPM got caught, but how many do not get caught or arrange the spoofing in such a away that they have (more) plausible deniability. This law is unworkable and not sure if there's anything benefit in the end... as in crypto anyone who spoofs can have their bluff called anytime, so perhaps transparent free-for-all market is better for price discovery than pre…

> On the other hand, it will always happen given the incentive. A big negative incentive is law enforcement. Otherwise you could make the same argument for literally every single other kind of crime. Someone does you wrong? Well there's a big incentive to straight up take their kneecaps. But you know, the law and whatnot seriously disincentivizes that kind of behavior. > This law is unworkable and not sure if there's…

If I understand correctly, the people harmed by the practice of spoofing are day traders who naively believe they can do technical analysis on an order book to determine the short-term direction of prices. Nope, I don't really feel sorry for either of them.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#17

Post by arcticbull »

olalonde wrote: post #16
arcticbull wrote: post #7

Earlier quoted context omitted.

> On the other hand, it will always happen given the incentive. A big negative incentive is law enforcement. Otherwise you could make the same argument for literally every single other kind of crime. Someone does you wrong? Well there's a big incentive to straight up take their kneecaps. But you know, the law and whatnot seriously disincentivizes that kind of behavior. > This law is unworkable and not sure if there's…

If I understand correctly, the people harmed by the practice of spoofing are day traders who naively believe they can do technical analysis on an order book to determine the short-term direction of prices. Nope, I don't really feel sorry for either of them.

It disrupts price discovery and allows the market markers to move the market at will. It's not really relevant whether you personally love day traders. There's nothing illegal or immoral about day trading - but there is something illegal about market manipulation, and specifically, spoofing. At least in traditional markets.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#18

Post by arcticbull »

choppaface wrote: post #12

isn’t most of crypto trading spoofing? https://arxiv.org/pdf/2108.10984.pdf When will regulators crack down on that?

This is one of the main reasons that bitcoin ETFs keep getting rejected by the SEC. [1]

[1] https://www.sec.gov/rules/sro/cboebzx/2021/34-93559.pdf (page 15).

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#19

Post by caffeine »

arcticbull wrote: post #15
runeks wrote: post #13

Earlier quoted context omitted.

They didn’t spoof trades. They placed orders without the intent of trading anything. > The order finds that, from at least 2008 through 2016, JPM, through numerous traders on its precious metals and Treasuries trading desks, including the heads of both desks, placed hundreds of thousands of orders to buy or sell certain gold, silver, platinum, palladium, Treasury note, and Treasury bond futures contracts with the int…

> They didn’t spoof trades. They placed orders without the intent of trading anything. That's the definition of a spoof trade. [1] > Spoofing is a form of market manipulation in which a trader places one or more highly-visible orders but has no intention of keeping them. [1] https://www.investopedia.com/terms/s/spoofy.asp

I think you misunderstood GP - he is saying they didn’t spoof trades, ie order executions, which is correct because you can’t spoof trades.

You are talking about spoofed orders.

A spoofed trade doesn’t really exist - the closest thing would be a wash trade, where you trade with yourself to make other people think a price is trading.

Re: CFTC Orders JPMorgan to Pay Record $920M for Spoofing and Manipulation (2020)

#20

Post by [deleted] »

caffeine wrote: post #19
arcticbull wrote: post #15

Earlier quoted context omitted.

> They didn’t spoof trades. They placed orders without the intent of trading anything. That's the definition of a spoof trade. [1] > Spoofing is a form of market manipulation in which a trader places one or more highly-visible orders but has no intention of keeping them. [1] https://www.investopedia.com/terms/s/spoofy.asp

I think you misunderstood GP - he is saying they didn’t spoof trades , ie order executions , which is correct because you can’t spoof trades. You are talking about spoofed orders . A spoofed trade doesn’t really exist - the closest thing would be a wash trade, where you trade with yourself to make other people think a price is trading.

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