Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

cftc.gov

Post reply on HN
Print view View original

131–140 of 200 posts

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

#131

Post by joshsyn »

fnordfnordfnord wrote: post #128
caffeine wrote: post #126

Unpopular opinion here: these rules are stupid. It’s like fining or jailing someone for bluffing in poker. Of course people are spoofing or doing other manipulative activity. Similar things happen in retail all the time with no jail sentences, it’s just not algorithmic. “40% off but the offer ends in 3 hours!” is designed to mislead you into thinking there is a short-term mispricing of the product in a very similar w…

Other markets are also rife with deceptive, arguably fraudulent practices so they should be policed first? The CFTC isn't even empowered to regulate those other markets.

Why can't the investors be aware of these sort of things happen? How long can the regulators keep playing catchup so the investors are disillusioned that everything is fair value.

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

#132

Post by fnordfnordfnord »

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…

>https://www.bbc.com/news/explainers-51265169

>Michael Coscia in 2013.

>Coscia was sentenced to three years in prison for spoofing futures markets using a specially designed computer program, making an estimated $1.6m (£1.2m).

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

#133

Post by ClumsyPilot »

pid-1 wrote: post #69
lottin wrote: post #53

Earlier quoted context omitted.

Shareholders can't be asked to police the company. That's not their job. They don't have the resources nor the expertise to do it.

Shareholders literally own the company. Not making them accountable for their companies actions is prob the worse incentive system ever.

No no, it's bad to ask questions of the management team, we call those "Activist investors"

https://en.m.wikipedia.org/wiki/Activist_shareholder

The sibling comments have an interesting worldview: can't fine management cause it's not their firm, can't fine shareholders cause it's not their fault, its nobody's fault.

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

#134

Post by ClumsyPilot »

caffeine wrote: post #126

Unpopular opinion here: these rules are stupid. It’s like fining or jailing someone for bluffing in poker. Of course people are spoofing or doing other manipulative activity. Similar things happen in retail all the time with no jail sentences, it’s just not algorithmic. “40% off but the offer ends in 3 hours!” is designed to mislead you into thinking there is a short-term mispricing of the product in a very similar w…

"Or the real estate market, where basically every single price you see is a lie"

"these rules are stupid"

What never ceases to amaze me about free market extremists, is how much they take living in a civilised society for granted.

Try living in Russia where no-one is keeping fraud in check, you will quickly appreciate why we have these rules. A productive economy is imposible where every transaction could mean your savings dissapear into a black hole

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

#135

Post by swsieber »

plebianRube wrote: post #123
ycombobreaker wrote: post #118

Earlier quoted context omitted.

JPM makes a lot of money doing a lot of things. You need to compare the fine vs. their trading revenue.

Why would I look at just their trading revenue? The fine was levied against the entire company, not just their trading subsidiary. >settling charges against JPMorgan Chase & Company (JPMC & Co.) and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (JPMS) (collectively, JPM)

Because if these are trading actions that lead to these fines then a rational actor might decide against taking then in the future lest trading become a net negative.

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

#136

Post by ClumsyPilot »

totalZero wrote: post #94
rich_sasha wrote: post #25

Earlier quoted context omitted.

I think a market where everyone spoofs with impunity is a hellhole. Yes it’s hard to define and police, but that’s probably better than the alternative.

Spoofing is as old as time, as are most forms of market manipulation. The algo shops are fortunate that the regulators are accommodating the drawbacks of their machinery. That doesn't mean all of the regulations make sense in the broader context of market activity. "Act fast because these are selling like hotcakes!" "I've got another guy who wants to buy the car for $5k but I'd sell it to you for $6k if you can bring…

The difference is impact - Market for old cars or shoes is not indexed and securitised with a potential to cause a global financial meltdown.

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

#137

Post by usefulcat »

adriancr wrote: post #24
dudeinjapan wrote: post #23

For the uninitiated, "spoofing" does NOT mean what you think it might, e.g. spoofing network packets or making fake trade records. "Spoofing" simply means placing orders on the exchange orderbook which one supposedly does not intend to execute. I've never understood this, because any bid/ask order on the orderbook CAN be executed against, until it is canceled. If they were "flashing" large bids/asks that were being i…

Ideally the less manipulation you have the better working market. So, it's good that spoofing is illegal. Their only purpose here was to: "Through these spoof orders, the traders intentionally sent false signals of supply or demand designed to deceive market participants into executing against other orders they wanted filled. " That being said, algos could have hit the large spoof bid, but imagine if it was legitimat…

> That being said, algos could have hit the large spoof bid

I would guess that they sent a bunch of orders and them immediately cancelled them. If that's what they did, then by the time other market participants see those orders (remember network latency), the orders will already have been cancelled, in which case it would be literally impossible to trade against those orders after having seen them in the market data.

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

#138

Post by usefulcat »

nnx wrote: post #6
arcticbull wrote: post #4

Just remember all this? It's completely legal in the crypto markets. It's bad here, and its so much worse there.

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…

I can imagine ways that order spoofing would look significantly different from legitimate (if possibly high frequency) trading activity. For example, if I'm constantly sending and cancelling a single order, that might look a bit like spoofing. Or it could be a glitch in a trading algorithm, or possibly even a legitimate reaction to some other periodic, high frequency pattern in the market data.

OTOH, if I send 100 orders and then immediately cancel all of them, and especially if I do that repeatedly, I can't think of a legitimate reason for that; why not just use a single order? This matters because when those orders show up in the market data, I'll know that all (or most anyway) of them came from me, but other market participants will not know that those orders all came from the same participant.

This kind of behavior would not be difficult to look for in the market data, especially after the fact, so I don't buy the argument that laws which forbid such behavior are 'unworkable'.

Source: have been doing algorithmic trading for many years

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

#139

Post by caffeine »

ClumsyPilot wrote: post #134
caffeine wrote: post #126

Unpopular opinion here: these rules are stupid. It’s like fining or jailing someone for bluffing in poker. Of course people are spoofing or doing other manipulative activity. Similar things happen in retail all the time with no jail sentences, it’s just not algorithmic. “40% off but the offer ends in 3 hours!” is designed to mislead you into thinking there is a short-term mispricing of the product in a very similar w…

"Or the real estate market, where basically every single price you see is a lie" "these rules are stupid" What never ceases to amaze me about free market extremists, is how much they take living in a civilised society for granted. Try living in Russia where no-one is keeping fraud in check, you will quickly appreciate why we have these rules. A productive economy is imposible where every transaction could mean your s…

No, I am being specific here. I am referring to rules regarding market manipulation in lit order books of publicly traded securities and derivatives. Those rules are stupid.

I don’t think all rules are stupid, just these particular rules.

The reason I think the rules are stupid is that they don’t prevent fraud, they just prevent behaviour which is considered pretty legitimate in every other marketplace. Like, a spoofed ask price isn’t fraud - you can actually buy the price, and you will be filled.

There is no chance order spoofing will cause your life savings to disappear in a black hole. I think regulation to ensure that remains the case (ie around custody) is very important.

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

#140

Post by caffeine »

fnordfnordfnord wrote: post #128
caffeine wrote: post #126

Unpopular opinion here: these rules are stupid. It’s like fining or jailing someone for bluffing in poker. Of course people are spoofing or doing other manipulative activity. Similar things happen in retail all the time with no jail sentences, it’s just not algorithmic. “40% off but the offer ends in 3 hours!” is designed to mislead you into thinking there is a short-term mispricing of the product in a very similar w…

Other markets are also rife with deceptive, arguably fraudulent practices so they should be policed first? The CFTC isn't even empowered to regulate those other markets.

I’m saying it’s not really deceptive or fraudulent.

Is it fraudulent that you offer your house for sale, but when you get a few buyers willing to pay the asking price, you move the price up?

Not really. But that is WAY more manipulative than anything that is even POSSIBLE in the public markets, let alone what’s allowed. (The FX markets are an exception where this can happen on certain platforms).

I’m saying we tolerate these behaviours in every other market because they are not really fraud. It’s not lying to say you are bid and then cancel it later, so long as you honor any trades you do get.

Post reply on HN