81–90 of 200 posts
Capital gains over last few years have been insane. The fine might be higher but a 400MM profit 5 years ago would have easily doubled just investing in SP500.
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.
Earlier quoted context omitted.
It’s crazy. If one tried to steal 10k from the bank, you would go to jail. If you steal millions through illegal trade practices, you just pay a fraction of what you stole.
Even if they had exactly the same outcome, one is theft the other is simply breaking the rules. It's a bit like killing a person using a gun and killing a person as a result of driving like the rules don't apply to you. Once it is established that you did the act, the first one undoubtedly puts you in jail for a very long time no matter who you are and the second one may get you a fine and no jail time so that no har…
Maybe it's time to make financial-crime penalties a bit harsher.
“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald. No, Mr McDonald, it's quite the opposite. The important message is that if your organization can keep the profits from criminal activities higher than the penalties, they can perpetua…
A cursor search shows that the fine is less than 10% of their last quarter NET income of 12.1 billion.
I would certainly keep doing illegal things if my only penalty was a simple fine like that every 10 years.
Earlier quoted context omitted.
US prosecutors literally said that they cannot criminally charge JPM (in another case) because that would destabilize the US financial system. They are literally "too big to jail".
a (good) source would've been great :)
> That sentiment was echoed as late as 2012 by Lanny Breuer, then the head of the Justice Department’s criminal division, who said in a speech at the New York City Bar Association that he felt it was his duty to consider the health of the company, the industry, and the markets in deciding whether or not to file charges.
https://www.theatlantic.com/magazine/archive/2015/09/how-wal...
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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.
I see your point, and thank you for the clarification. I've often heard this referred to as "spoof trading" and "spoof orders" interchangeably. I could be mistaken, of course. For instance [1]. [1] https://constantinecannon.com/practice/whistleblower/whistle...
“Order” is before execution, “trade” is after.
Earlier quoted context omitted.
Day traders mostly don't even have access to real-time L2 market data, so they mostly can't be harmed by spoofing. The harmed parties are algorithmic traders that use L2 market data to adjust their theoretical value.
I assume L2 in this context means level 2 and not layer 2?
“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald. No, Mr McDonald, it's quite the opposite. The important message is that if your organization can keep the profits from criminal activities higher than the penalties, they can perpetua…
I don't think people realize how much money JP makes. A cursor search shows that the fine is less than 10% of their last quarter NET income of 12.1 billion. I would certainly keep doing illegal things if my only penalty was a simple fine like that every 10 years.
It's hard to not feel shocked when seeing numbers in the billions but you can't forget they are often accompanied by an equally shocking denominator.
Why do CFTC try to police this? For the money or optics? Orders far from the BBO are clearly irrelevant and those close to the BBO are not "free" for the spoofer given they have to bear the risk that the orders could be filled if the market moves. Effectively it means anyone cancelling an order has to worry that their action could be interpreted as "spoofing" - which will make market making more risky and expensive.…
When you post an order to any exchange, you are doing so under the agreement that it is legitimate and that you actually want to be filled at that price. Obviously a participant’s desire desire to be filled at a specific price can change over time, so you’re allowed to cancel orders as well. That makes it difficult to detect and prove that a participant is acting maliciously. But if the BBO isn’t really moving and you keep posting/cancelling orders all day in certain patterns then eventually you’re going to get investigated and told to explain your behavior. And that’s where you might struggle to justify things.
> Effectively it means anyone cancelling an order has to worry that their action could be interpreted as "spoofing"
On human time scales, I think you’re vastly overstating the relevance of accidentally spoofing. For automated trading, yes you have to be careful that your signal doesn’t flicker right on the edge of your threshold. Sometimes that means you need to purposefully limit your order entry or sometimes it’s just a matter of improving your signal.
> The only ones this type of enforcement "protects" are are those who naively think they've discovered a strong trading signal based on order volumes away from the BBO.
I would say most of high frequency trading, which is the primary means of market making these days, relies on the state of the order book as a primary signal. Sure they incorporate other outside information, but when you’re trying to be the fastest, the only data you have to work with that is fast enough is the what the exchange says the order book is. No body’s paying attention to $1 quotes on a $10,000 stock. But a couple dozen price levels from the BBO on GOOG might easily be less 1% away and maybe spoofing there at large sizes might be enough to negatively affect HFT and cause spreads to widen, which hurts everyone.
Basically these regulation exists because only legitimate activity is allowed. Trying to fool other market participants (spoofing) or trying to slow down specific matching engines (quote stuffing) are obviously not legitimate.
“This action sends the important message that if you engage in manipulative and deceptive trade practices you will be caught, punished, and forced to give up your ill-gotten gains,” added Division of Enforcement Director James McDonald. No, Mr McDonald, it's quite the opposite. The important message is that if your organization can keep the profits from criminal activities higher than the penalties, they can perpetua…
It’s crazy. If one tried to steal 10k from the bank, you would go to jail. If you steal millions through illegal trade practices, you just pay a fraction of what you stole.