HFT Stock Manipulation Caught On Tape

Tyler Durden's picture

It doesn't get any more blatant than this. Once again, courtesy of Nanex we present to our incompetent regulators prima facie evidence of what is outright tape painting via what is an apparent HFT algo trying either to front run an order, to test for the presence of other predatory algos, and in general to take advantage of Reg NMS only protecting displayed liquidity over non-displayed (a topic we discussed two years ago). In the example below, which shows unique trades in the stock of XEL.PR.G, in the span of 30 seconds, 430 shares are bought up on the way up from $90.5 to $102.25, and then sold off once again in another 10 seconds, hitting all bids as soon as they appeared. Now this is not some HFT-darling which trades millions of shares per day (and sees blasts of tens of millions of quote stuffing packets in hours) and thus will likely be ignored by the general population... until it does hit some stock that people do care about. Naturally the implication is that, as Nanex points out, if all stocks traded/quoted at this frequency, even the the SEC could figure this out in a few weeks, after assembling a multi-discipilanary team of course. Is it any wonder that virtually nobody trades on open exchanges anymore (yes, most trading, or what's left of it has shifted to Sigma X and other dark pools) where the only survival tactic for such legacy monsters as the NYSE and Nasdaq is to laterally buy up as many of their peers as they can now that organic growth no longer exists: gotta love a world in which there are 83 different ATS venues, all of which permit some permutation of millions of stock manipulation strategies.

Trade and NYSE Quote Price for XEL.PR.G

Trade and quote prices across all exchanges:

Trade summary/balance sheet:

And a complete list of the labyrinth of over 80 Alternative Trading Systems currently in operations:

ATS List

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DK Delta's picture

amazing...no one does this shit better than you guys...I don't know where you find this stuff but keep it up

LongBalls's picture

I just started following this site. I am downright in awe of your reporting in truth and accuracy of pertinent information. Keep it up fighter!!! History will judge you in the best of light. We are here to support you!!! We have to stick together. There WILL be a tipping point in all this madness !!!

dark pools of soros's picture

Goldman already bought the rights to the ZH movie deal.. Kudlow is doing the screenplay

Manthong's picture

Just wait till a few of those secret autonomous search and destroy robots the military has break loose.

Those are some algos to worry about.

Oh.. they're loose already?

Reptil's picture

Yeah the ones that feed on bio-organic matter, like dead people, to replenish their batteries, and are, in case they're cut off from the line to the spotty teenager playing videogames whilst getting payed, equipped with algos that become fully autonomous, and will go into "survival mode", whatever that may be.

Oh and they learn to. (no joke)

Whatta's picture

and can reincarnate themselves into mutant robotic sharks with death ray eyes and night vision goggles that can see the future?


who is going to be the first exchange to offer a for-fee service that gives you tomorrow's close today...so that we non's can have a chance to play this game?

mberry8870's picture

From Dodd Frank (yes legislation that has passed i.e. this is law)


In section 747 of the Dodd-Frank Act,

Congress amended the CEA to expressly

prohibit certain trading practices that it

determined were disruptive of fair and

equitable trading.


(A) violates bids or offers;


(B) demonstrates intentional or

reckless disregard for the orderly

execution of transactions during the

closing period; or

(C) is, is of the character of, or is

commonly known to the trade as,


‘‘spoofing’’ (bidding or offering with the

intent to cancel the bid or offer before




mberry8870's picture

This is also applicable to the SEC as well as the CFTC

augie's picture



meanwhile they have park cops with ar-15's in the jefferson memorial to stop people from dancing. I mean literally, the act of dancing.

to move one's feet or body, or both, rhythmically in a pattern of steps, especially to the accompaniment of music.
2bigtoofail's picture

Well you sure would not want freedom of expression to take place without permission within sight of the supremem overlords in DC. If people ever exercise their "freedom" they need to be immediatly represed and punished for such blatant acts of treason. It is truely a sorry state we now find ourselves in. Divorced from the principles of natural law that were the very in spiration for the revolution in the first place. That Magna Carta is quite unknown to most and forget finding anyone who even cares enough to know what is enshrined within the bill of rights. Insider trading will not be policed until people are awake enough to care. Good post.

breezer1's picture


thats all i have to say on this matter.

Astrolabe's picture

would some kind soul please explain, as though they were speaking to a 5th grader (because i am in fact a 5th grader) what exactly is going on here?

thank you in advance!

augie's picture

Someone correct me if i am wrong but i believe this is a phishing algorithm which aims at locating large orders at specific price levels to discover market depth or how many people want to buy and sell the security or stock.

mberry8870's picture

Pretty close but it also can be an attempt to send a false signal to the market that the increase (or decrease) in price has something to do with fundamentals. If the intent is to send a false signal in order to induce someone to act this would be a fraud. Making the distinction between determining liquidity and depth v. manipulation is beyond my capabilities.

MayIMommaDogFace2theBananaPatch's picture

severe remedial student clumsily asks for additional clarification:

More please!  I am going to make a trainwreck out of the wording, please bear with me. Perhaps if I ask this in a minimalist manner it won't be too painful... 

Am I correctly grasping that the following is an important detail?  If so, what can be inferred from it?

* Two charts -- same period -- same stock

* One is NYSE "perspective" only -- other is composite "perspective"

* On the NYSE chart, highest priced trade is "free-floating" -- but on the composite chart it is intersected by yellow plot (PACF Ask).  This PACF Ask also stands out because it seems to 'anticipate' the peak of the series before the 'walk up' starts.

Is this meaningful or FAIL?  If it is meaningful what does a knowledgable individual infer from what they see here (from that specific piece of the picture)?

Manthong's picture

Synthetic tatonnement on digital nanosecond steroids.

Cdad's picture

You are correct.  This is ONE thing that is going on.  

When the upside block sell order is discovered, a short position is set one hundredth of a penny in front of it, and then the long side of the book is unloaded driving the price back down, the assumption being that the large seller will commence chasing the falling bid downward, creating nice price action for the newly set short position.

This happens on on the opening of the market, first hour, every day.  The idea is to discover the downside support and upside resistance as measured by where the blocks are, which is why you get that up/down...or down/up pattern in the morning.  The spread is played until the side with the most conviction is established [in theory anyway, because as we all know, the algorithms have been bullish for two years resulting in a move up in the second half of the day...always].

Considering that the S&P absolutely broke down on Wednesday, the pattern will now likely be reversed, with discovery moving upward first, and then cascading down in the second half of the day [on the indexes anyway]...but I digress.

More recently, I have seen equities move up...WITH NOT TRANSACTIONS AT ALL.  Anyone else seeing this?  The bid is simply raised.

By the way, in mid 2007, algorithmic trading was 26% of market volume.  At present, it represents 80% of all trades by volume.  So folks should be getting their pulse rifles tuned up and sighted in because, as I recall, things did not exactly work out well for humans in the Terminator movies.

Hulk's picture

I can't possibly thank you enough for that... stunning.

rocker's picture

@cdad  'I have seen equities move up...WITH NO TRANSACTIONS AT ALL'   

Man, I am glad someone else has picked up on this. Many will move up and down without a single buy or sell. Amazing to watch.

Cdad's picture

It kind of redefines the entire notion of "supply and demand."  In the case of the bid that rises without a transaction, the "supply" is someone who wants to sell it higher [selling that causes a stock to rise], while on the buy side there is...ummm....Casper?  In reality, what is often happening is that someone has shorted the stock...and that someone needs to be rolled up even if Casper is the only buyer to do the work...or some such computerized nonsense.  

This "special situation" requires a certain kind of stock [perhaps, not unlike the example that Tyler has provided...although I don't know a thing about the stock to which he is referring].  You see it often on a stock that is extended massively to the upside.

The market has zero integrity.  In fact, it is perhaps more accurate to say there is NO market anymore...but rather there is this massive "instrument" whose only function is minute to minute price action, action that is disassociated from the very things that the criminal syndicate Wall Street bankers talk about on the BlowHorn [CNBC] all the time:  "historical valuations", "growth", "channel checks" [my favorite], "blah" "blah" "blah."

augie's picture

Heh, my brothers an HFT guy in chicago and I think he might disagree with the machines taking over completely but awesome explination none the less. Thank you so much for that insight you just informed a lot of people.

Cdad's picture

I see now that my thoughts are not exactly in tune with Tyler's example...although my thoughts about HFT criminals are not unique and well established by many.  Allow me to refine them to more closely approximate his example.

Tyler's example also illustrates yet another of the crimes going on, namely executing trades well outside the established "market" as implied by the bid ask spread.  This was HUGE in 2007 right before the market collapsed.

My thoughts on how this particular thing happens has to do with the fractured nature of the "market" via the endless venues Tyler points out in his list.  The trick, as I saw it happening in '07, was the meeting of fill or kill orders priced to the fourth decimal point.  In Tyler's example, this fourth decimal point trick is not being used, but very often is on the stuff I see. Bear with me.

In summer of 2007, it was quite common to see incredibly wide spreads on stock transactions during days when the market was distressed.  I remember that the MSM explanation of this phenomena on several days when this was going on was that the NYSE messaging system was overloaded.  Gee, I wonder what would have overloaded their system?

Anyway, during this particular time that I am talking about, the bid and the ask were irrelevant when considering where trades where actually occurring.  Trades were going off on Boeing, for example, a couple bucks below the bid and a couple bucks above the ask.  This would go on for hours, mind you.  And all of these trades were priced to four decimal points.  Now four decimals points is just fine when they occur between the spread because the market maker is simply splitting the difference to facilitate both the buyer and the seller.  However, there is no logical reason for this to occur outside of the bid/ask spread....unless....unless...

...these were matched orders, supposedly a perfect fit for the parties involved.  A perfectly efficient market, you might say. This is illegal, mind you, and back then I did some research on "matched orders" and discovered that some guys were actually prosecuted for this back in 1994...or 1996.

I did everything I could in my simple, useless human form to see if I could buy stock on these wide spreads that were printing money minute to minute, but alas, I could not get filled.  Of course, despite how I was bidding the same line on which the algo kings were filling, my lowly two decimal point bids were obviously considered inferior by market makers...err...Terminators.

There are 100 other such ways to cheat this electronic market...I mean this "price action instrument."  I understand that Mary Shapiro is just about done with her relentless, year long meetings with Goldman Sachs and JP Morgan about which SEC laws she should enforce, and which SEC laws she should just forget about.  And I'm sure, any day now, the SEC is going to do its job.

And so as Duncan Niederauer now spends his days selling the floor of the New York Stock Exchange to the Germans, we have him, in part, to thank for the co located computers in the room next to where he takes his afternoon constitutional.  And if anyone actually thinks that capital will form in a market or in banks as corrupt as ours, well maybe they ought to give up watching Dancin' with the Stars on their iPad2 and instead write letters to their congressman.

Until such time, please enjoy the continuing Summer of Recovery.

augie's picture

I was really under the impression that there were some "honest" (whatever that means) HFT firms out there but i guess not. Damn.

blindman's picture

speaking of letters to reps.
EXCELLENT! (*****)

Posted on June 5, 2011 by maxkeiser| 26 Comments
see comments and link at link.

blindman's picture

@.."By the way, in mid 2007, algorithmic trading was 26% of market volume. At present, it represents 80% of all trades by volume."...
so what is the point or attraction of being human in this new

BlackholeDivestment's picture

ZERO! ah haa haa haa...

Mars ain't the kind of place to raise a kid. http://www.youtube.com/watch?v=5hARDXYz2io&feature=related

blindman's picture

that ! ...i'm sorta speachless. w.s. has some
remarkable skills but i will not make any remarks
beyond !. ok., he could read the phone book and
make it dramatic and funny.
Ground Control To Major Tom (Animation) "Space Oddity"
so, the machines, man made, have turned man power into
horse power etc.. and now man is consumer and useless
breeder stock? a parasite of his own making? is this
the predominant narrative we are being indoctrinated with?
some might object and take exception.
this just in
Our Feature Presentation: Ronnie “The Rocket” O’Sullivan Fastest 147

ThirdCoastSurfer's picture

Is it just me,  or is it obvious to professionals when orders from retail accounts are in play? Even as a retail investor I have seen Level 2 postings of my submissions clearly indicating my retail brokers submission as it seeks fulfillment across all exchanges. Clear proof of this is the ability top submit a "hidden stop" while bids and offers sit out there like a "kick me" sign on the arse. Talk about piranha activity in this low volume, HFT environment! There are more hedge funds than stock listings.  How do pay the bills, procure billions in bonuses across numerous firms and boast of never having a losing trading day in a quarter? It's like sitting down at a high stakes poker game against players with unlimited funding. Once they identify you as someone who doesn't belong, someone independent, they can just keep raising the ante until you're forced to fold. 

Furthermore, when I buy a stock, my broker actually has control of the shares and can offer them as shorts. Another huge clue to Ali Baba and the 40 thieves.

The "2B2F" group has seen a lot of regulation and most have actually left or reformed their game but no one is looking at the retail side of the abuse and this is just a big part of the problem as Goldman trading against its clients.   

fellatio is not fattening's picture

A small point, but if you do NOT want your shares loaned out for margin than hold them in a cash acct.  Your margin agreement says you allow the shares to be "hypothicated" meaing loaned out, in a cash acct. they cannot loan them out.

Canaduh's picture

They are using fancy math on world class computers to prey on false assumptions of the sheep.

Yes_Questions's picture

Sheep, hell, they prey on each other.

The hole through which the blood funnel sucketh need not be pierced through innocent skin.

fellatio is not fattening's picture

I don't really understand the activity but as a novice if they execute all these trades and bring the stock UP than see just as quickly and bring the stock down, where do they make any money?  There can't be much order flow payment, please help explain.  I do understand HFT getting paid for shares traded and even if it's fractions of a penny doing 100's of millions of shares a day = real money, but not this preferred.  Thanks

Yes_Questions's picture

incompetent regulators

They aren't equipped to regulate, and those posted to the task appear symbolic anyway.

I am neanderthal when it comes to equities by choice because of this HFT bullshit.  By time one decides to BTD, there's a fucking predatory algo out there designed to fleece me before I complete a trade?

Makes sense people are flocking to physical stores of value.

I know I am probably missing something by not actively trading stocks, but it seams my mental health is better off avoiding this casino. 




Cdad's picture

And did you know that your broker is also involved in assisting the algo in its task of fleecing you?  Indeed.  Ever place an intraday stop order only to watch it "advertised" on the L2 book?  That isn't supposed to happen.  On a stop loss, the order is only supposed to be revealed when the bid draws near to it.  That isn't exactly how it works, however.

Then there is, of course, your broker's internal transactions based on its desire to buy or sell...and how it makes you its mule.

I could go on and on about this, as I have been watching this HFT crime wave on the granular level for a long time.  What is most disturbing to me, and most broadly, is how the criminal syndicate Wall Street banks apparently are not at all concerned about the integrity of the market.  Once integrity [or read in reputation] is lost, it takes generations to restore that...which is why my theory for a long time now has been...this is [err...was] the LAST rally.

Yes_Questions's picture

Thanks for articulating, btw.

I had a feeling before stumbling on this site that the "market" would be a spider web for me, and posters like you have helped confirmed my suspicions.

Don't get me wrong, the complexity I see in trading is very attractive to me but only in the sense of detecting and avoiding traps.  Not for making money.

My own risk tolerance has me wanting to go in with the equivalent of a tuned pulse rifle just to at least feel like I would have an advantage. 


MayIMommaDogFace2theBananaPatch's picture

 That isn't supposed to happen.  On a stop loss, the order is only supposed to be revealed when the bid draws near to it.  That isn't exactly how it works, however.

Another burning question answered for me.  Thank you.

Franken_Stein's picture


I hate to say it, but Lawrence Eagleburger has joined Alexander Haig in being dead.



VyseLegendaire's picture

Pullitzer Prize? Lol fuck that shits for shills. 

JW n FL's picture

Look! Bottom LINE!! Tyler! I Luv Ya Man! But in this Country, America! If you tell the Truth! You will go to Jail!


Do YOU! Understand? if you tell the truth! you will go to jail! for some reason, they will find a way to put you behind bars to shut you up!


see proof below!


UBS Whistle Blower in Jail for helping the IRS with over 2,000 Tax Dodgers! http://goo.gl/s8JYp  

'Austrian tax evasion whistleblower' dies in Swiss jail http://goo.gl/w3bqP

Swiss tax whistleblower to give WikiLeaks new data & in Jail for it http://goo.gl/KiQhV  


Corporations Own the Lobby!


The Lobby Owns the Government!


Law Enforcement works for the Duly Elected Lobby Whores!


“We the People” are Screwed!



Top U.S. Lobbying Banks Got Biggest Bailouts


1.    [PDF]

A Fistful of Dollars:Lobbying and the Financial Crisis; Financial ...

File Format: PDF/Adobe Acrobat - View as HTML
A Fistful of Dollars: Lobbying and the Financial Crisis by. Deniz Igan ...

Rigged Market Capitalism & Propaganda within the U.S. by the U.S.  http://goo.gl/RtmEr PLUS! http://goo.gl/qH4dN PLUS!! http://goo.gl/Uzm3q


Top 10 corporations which paid no taxes

Here is Sen. Sanders’ list of the 10 worst corporate income tax avoiders:

1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings. (Source: Exxon Mobil’s 2009 shareholder report filed with the SEC here.)

2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion. (Source: Forbes.com here, ProPublica here and Treasury here.)

3) General Electric made $26 billion in profits in the United States over the past five years and, thanks to clever use of loopholes, paid no taxes.(Source: Citizens for Tax Justice here and The New York Times here. Note: despite rumors to the contrary, the Times has stood by its story.)

4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009. (Source: See 2009 Chevron annual report here. Note 15 on page FS-46 of this report shows a U.S. federal income tax liability of $128 million, but that it was able to defer $147 million for a U.S. federal income tax liability of negative $19 million.)

5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year. (Source: Paul Buchheit, professor, DePaul University, here and Citizens for Tax Justice here.)

6) Valero Energy, the 25th largest company in America with $68 billion in sales last year, received a $157 million tax refund check from the IRS and, over the past three years, received a $134 million tax break from the oil and gas manufacturing tax deduction. (Source: the company’s 2009 annual report, pg. 112, here.)

7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department. (Source: Bloomberg News here, ProPublica here, Treasury Department here.)

8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury. (Source: Paul Buchheit, professor, DePaul University, here, ProPublica here, Treasury Department here.)

9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2006 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction. (Sources: Profits can be found here. The deduction can be found on the company’s 2010 SEC 10-K report to shareholders on 2009 finances, pg. 127, here.)

10) Carnival Cruise Lines made more than $11 billion in profits over the past five years, but its federal income tax rate during those years was just 1.1 percent. (Source: The New York Times here.)



http://goo.gl/cgg4O General Electric $14.2 Billion in Profits, Pays $0 in U.S. Taxes

$39M Dollar Lobby in 2010 $14B in Profits =’s NO TAXES PAID! http://goo.gl/rZLDY

$10 billion sale of F.D.I.C.-backed debt http://dealbook.nytimes.com/2009/01/06/ge-capital-begins-10-billion-debt-sale/


Senate Republicans blocked a Democratic Bill to End tax Breaks for Moving U.S. Jobs Offshore! http://goo.gl/6qhnK 

50,000 Manufacturing Jobs a Month since 2001 have LEFT! The United States for China!

Republicans to roll out new tax-cut proposal: WSJ
25 May 2011
, by Michael Kitchen - Los Angeles (MarketWatch)

Republicans in the U.S. House of Representatives are set to unveil a new economic proposal Thursday that will cut taxes for multinational corporations and lower other tax rates.



1) House and Senate Renew PATRIOT Act With No Modifications
National Security Letters Increasingly Used on Americans
Proposed Senate Bill Would Add Civil Liberties Protections
Senators Raise Concerns on DOJ's Interpretation of PATRIOT

1) House and Senate Renew PATRIOT Act With No Modifications

On May 26, the House and Senate renewed three controversial provisions of law related to the USA PATRIOT Act that were set to expire the next day.  The renewal was passed in the form of an amendment to an unrelated bill, S. 990, that itself temporarily extended authorities of the Small Business Administration.  Despite efforts by individual Senators to introduce modifications to the Act's intelligence authorities, the final bill simply renewed the expiring provisions until June 1, 2015 without changes.



Franken_Stein's picture


We ... , erm, ... I mean you, ... you are screwed.


Screwed I say !

Can you hear me ?!


I want you all to go to Jefferson memorial now and do something outrageously lewd and obscenely uncivil.


I want you to, wait for it, ... , dance !


Unbelievable !

Now they're even dancing in our streets !


Where will this kind of unruly behaviour lead to ?


There seems to be no ending in sight !

First they want to speak their mind, next thing you now they're dancing in the street ?!


Holy shit !

Time to call in the National Guard and bring this dancing mob under control.

Declare national emergency.

All ports and airports to be closed.


JW n FL's picture

I think they pulled another dance off last nite? or there is one up coming!


Hurry! call the FBI / NSA / Fatherland Security! lets shut that quiet dance down before? before.. before? before they make no noise and dont touch anyone and dont destroy anything and maybe hold hands?


our Tax Dollars at Work! Protecting US! from quiet dancers everywhere! Thank God!!

sabra1's picture

every cop, swat team member, soldiers home address, phone number should be listed on line! how quickley things would change!