In case you've been wisely avoiding the press over the past few days, here's the background story:
A UK citizen, Navinder Singh Sarao, has been charged by US authorities with causing the 'flash crash' of May 2010 and is being threatened with extradition. His company is a one man show and he works from home, on his own.
For what it's worth, here's my two bob's worth on the whole 'spoofing' debacle:
1. If high frequency traders are able to set up systems which effectively (and legally) front run and harvest fractions of cents from ordinary buyers and sellers like you and me, then anyone should be able to do 'head fakes' to confuse the algorithms and profit from their own shortcomings. It will ultimately make the system stronger. Why should the front running business model be risk free? Either ban front running or make it a free for all. The abilty to employ lobbyists and pay major bribes, err fees, to exchanges for preferential access to deal flow shouldn't be a prerequisite for playing.
2. The statement 'Navinder Singh Sarao played a major part in causing the flash crash' is either a) false, or b) indicative of an incredibly fragile market setup that needs much strengthening.
3. I wish they'd use a different word for the alleged crime, spoofing meant something rather different where I grew up.
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