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England's FSA Focuses On Market Manipulation By Spoofing; In Other News SEC Continues To Do Nothing
A favorite practice by numerous market makers, better known as "spoofing," in which order blocks, which will never be executed, prop up either side of an order book with the goal of manipulating the stock price, is starting to get much needed scrutiny across the Atlantic.
According to Reuters, the FSA, the UK's seemingly infinitely more efficient regulator than its domestic Wall Street affiliate known as the SEC, "said on Tuesday it will fine or suspend
market operators involved in manipulation practices known as "spoofing"
and "layering."
Spoofing and layering involve putting apparent trades on share order
books to create a misleading impression of the stock price or
liquidity. They both constitute potential market abuse, an LSE
spokesman told Reuters.
Spoofing involves using systems' "direct market access," or DMA,
which can offer investors like hedge funds, fund managers and private
investors -- whether regulated by the FSA or not -- access to a stock
order book. In a spoofing case, a trader gives the impression to put in
a buy or sell order it does not want to complete to drive down the
stock's price.
Most investment banks offer DMA solutions to some of their clients, the LSE spokesman said.
Layering consists of submitting multiple orders, typically on one
single stock, to create the impression the share is highly liquid.
Could either of these openly illegal practices have anything to do with the insane moves in trash financials such as AIG, FNM and FRE, which continue dominating a bulk of share volume on the NYSE? Why of course, but maybe there is confusion in the domestic marketplace as to whether or not this is considered an abusive practice. The following clarification from the FSA clears that up:
"Some market participants may not be sure that it (spoofing or layering) is wrong. This is to clarify that it is," said [an FSA spokesman].
In the meantime, the SEC is either blissfully unaware that comparable trading protocols have driven up the fab five financial stocks' volumes to record highs, or sternly refuses to issue any proclamation against the massive speculative mania that has gripped American equity markets. After all, if Citi can close the day with a $25 billion market cap higher in the span of a few hours on nothing but a little spoofing and layering, why end it? In the meantime, retail investors should know better and understand that as long as they take their profits in these stocks which, by most estimates, are worth a few nickels at best, before everyone else, all shall be well. And Mary Schapiro can sleep well at night, fully aware of just how coginzant market participants are that the entire market has become a complete sham, and how the anger against her "regulatory" agency is more pronounced by the day.
h/t Lauren
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Top 5 stoks by volume on the NYSE today. C, FNM, BAC, FRE, AIG
All bankrupt firms. How very sad this market has become
every uptick in financial shares is proof that our markets are totally corrupt, and completely controlled by the very same dirtbags who created the debacle. It is disgusting.
wow, unreal
How about everyone only invests with funds working the London exchange? Sounds a lot more prudent/legal.
Oh c'mon... Mary herself has stated that her agency has already put in place "numerous measures" to ensure that fraud and abuse will never, ever take place under her SEC watch.
And you don't believe her at face value????
BTW... does anyone know what sort of budget the FSA has to work with on an annual basis?
Mary Shapiro to Main Street..."let them eat cake".
Spoofing and layering are concepts beyond the comprehension of government regulators, especially Mary Schapiro. After all, what can an executive from FINRA/SEC actually know of market operations? That is until they become partners of the firms they had regulated.
Corrupt to the core.
I have been seeing this a lot. Probably over a hundred times in the last 3 months. I follow stocks with very small float and tiny volume, less than 100k per day. The phantom orders appear, linger for a few hours, sometimes a few days and then just disappear.
Happens both on the buy and sell side. On a stock with maybe 50k volume, the spoof orders are commonly in the 50k to 100k range. They never ever get filled.
ive noticed that too
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How is that illegal?
I'll be honest I don't understand the difference between spoofing and putting an order out and withdrawing it later if it does not fill.
the difference is intent. If you never intend to have your order executed, and are only trying to manipulate the market, it's illegal. Interestingly, with all the hatred of high frequency trading here, I would think that readers would LIKE this technique - it's a way to fuck with the high frequency trading algo's who see this "false" demand and lift offers because of it... if you want to sell, you put in a big bid below, let the algo's run the stock, and sell into it. That is illegal though. Should it be? tough to say - i think if it were legal it would make the markets crappier - but i also think it would level the playing field with regards to a lot of concerns people have about high frequency trading. -Kid Dynamite
the difference is intent. If you never intend to have your order executed, and are only trying to manipulate the market, it's illegal. Interestingly, with all the hatred of high frequency trading here, I would think that readers would LIKE this technique - it's a way to fuck with the high frequency trading algo's who see this "false" demand and lift offers because of it... if you want to sell, you put in a big bid below, let the algo's run the stock, and sell into it. That is illegal though. Should it be? tough to say - i think if it were legal it would make the markets crappier - but i also think it would level the playing field with regards to a lot of concerns people have about high frequency trading. -Kid Dynamite
"Fab Five"
Trading Charts
None of these charts is not like the other?
Well you send 30 page documents to the SEC explaining Madoff ponzi and a few years later they are trying to say they aren't corrupt just incompetent and they need a bigger budget to fix it. I vote to leave them in place for 6 more months just for the LOLZ.
I thought they closed the Amex?
Don't buy it(a late effort to try to get people to believe in the market). The anglo-Saxon world is controlled by the same shadowey soiety.. Just look at the crisis from day one;everything took place in the UK was imitated here to the letter. Even the g20 meeting took place(in which it was decided to have a coordinated liquidity injection in the markets to prop it up)took place in London. and after the first failure for the s&p to go through the 950 level(with the bond debacle),TG hopped in a plane and went to London for instructions. Where he was dispatched to Saudi Arabia.And I have a very palusible theory for that trip...........
Natty, burning down the house. Leading the way for the unraveling.
OhMy
Would anyone like to comment on the strange moves in SPX futures starting about 2 minutes before the scheduled release of the ISM non-manufacturing numbers? These were sharp moves as if triggered by an early release of the data. There were several of them (as if several trader groups were getting the news ahead of time), and they continued till shortly after 10.
Are these ISM releases not supposed to be timed to the second?
This is coming from the White House. Nothing will be done.
http://www.sec.gov/complaint.shtml
hahaha
Watch for the "spring". Gov't must spring news or action in sudden moves to correct the markets. Open knowledge is contrary to their modus operandi.
Of course only the insiders are forewarned and profit by it, those lowest on the food chain are made poorer by moves against their future earnings/taxes or through the parasitical tappings of their savings/currency.
Contraction for at least a decade, and outsiders must disproportionately be squeezed to allay the insider's fall.
Is Mary Schapiro the Monica Lewinsky of the SEC?
BINGO...DIG DEEP..
I knew this was going on! Bid/ask humpers do this crap all the time with thinly trade stocks, effectively controlling the price action.. But of course they do this because the whole market is manipulated
Wouldn't get to carried away throwing plaudits at the FSA They missed the boat on a lot of stuff too
the entire market has become a complete sham.
correction:
the entire market has always been a complete sham
Markets are casinos. At the end of the pre-crisis boom, takeover fever was rampant and false rumours were spread constantly to manipulate price.
An example would be NXT, which went on a tear to 24.00, triggering stock options for management. A year later it was at 12.00.
Spoofing can be seen on DAX futures pretty much every day
"the UK's seemingly infinitely more efficient regulator than its domestic Wall Street affiliate known as the SEC"
Well, if so they would go public with the solved cases instead of threatening to enforce the rules. Or?
I traded CFDs a lot on the LSE and saw this a lot, and you knew it was just one person/machine doing it because they would all get pulled together with the use of the 'cancel all' facility.
I took lots of screen shots of what I thought was something very odd going on with a company and sent them to the FSA asking them to investigate... they did nothing.. it now appears that the company and CEO were fiddling the figures and also did not issue information about a large cancelled order which they should have done and also issued misleading information too.
The new directors are suing the exCEO for several million, but the shareholders are left with very little
The exCEO has skipped the country
And how is this going to be caught or enforced? Spoofing can be seen in every equity and bond futures market.
Google Paul Rotter.
Howzabout a fee on cancelled orders that fit a pattern over time?
"...the FSA, the UK's seemingly infinitely more efficient regulator than its domestic Wall Street affiliate known as the SEC"
Steady there! The FSA was responsible for bank regulation as well as retail products. I don't recall the FSA even anticipating the implosion of UK banks from their dangerous practice of giving huge sums of depositors money away to the likes of GS for neatly wrapped parcels of horse dung. I doubt they even knew of the existence of those new fangled assorted turd biscuits that Alan Greenspan used to promote on TV as beneficial to eat and lovely to look at.