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Top CFTC Official Chilton Blasts Computer-Generated Algorithms Run Amok, Blames Flash Crashes On HFT Robots

Tyler Durden's picture




 

Now even the CFTC is blasting High Frequency Pirates: Bart Chilton, a commissioner with the futures
regulator, said "mini-flash crashes occur all too often" following a
surge in high-frequency trading. Please someone finally wake up the Rip Van Widiots at the SEC and hold them accountable for not only scapegoating innocent parties, but perpetuating what is essentially a criminal market in which front-running by computers is not only allowed, but encouraged. More from Chilton:
"They don't cause as much of a disruption as that
of May 6, but more than once this year, runaway algos have disrupted
markets. By that I mean, cost people money." So if even the CFTC is all too aware of who is responsible for what has now become a daily stock crashing farce, when will Mary Schapiro and her 9 million pieces of silver finally get the memo?

From Reuters:

"We should explore ways to hold those who set off runaway robotic trades accountable," he said.

At least one algorithm is know to have disrupted the oil markets this year. Infinium Capital Management said in August it was the company at the center of a six-month probe by CME Group Inc into why a new trading program malfunctioned, racking up a million-dollar loss in about a second on February 3.

The regulatory agency faces tight deadlines to write regulations to implement the Wall Street reforms that Congress passed in July to increase oversight of the $615 trillion over-the-counter derivatives market.

Some measures have earlier deadlines, including speculative position limits in energy and metals markets, which must be finalized in January. Chilton questioned whether there should be position limits for financial futures.

"Given our experience with the Flash Crash, however, and the key role one financial futures market appears to have led in the domino decline, I'm wondering if it is appropriate to consider limits in these markets as well," said Chilton.

Good luck. JPM will never allow their multi-billion manipulative short bet in commodities, primarily in silver and gold, to ever be impaired, as the bloodbath that would ensue for the firm's P&L will make fraudclosure seem even more pathetic than the SEC's recent wristslap on Agent Orange.

 

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Mon, 10/25/2010 - 15:45 | 675960 bugs_
bugs_'s picture

Holy candy striped cancerwards!

Mon, 10/25/2010 - 15:46 | 675967 NOTW777
NOTW777's picture

erin burnett says HFT is good - increases liquidity

no interview for chilton

Mon, 10/25/2010 - 15:49 | 675972 EscapeKey
EscapeKey's picture

That woman has so many dicks in her mouth, it's hard to hear what she's on about at times.

Mon, 10/25/2010 - 16:25 | 676061 Godisanhftbot
Godisanhftbot's picture

Chaney?

Mon, 10/25/2010 - 15:47 | 675969 EscapeKey
EscapeKey's picture

I received a call from an FX trading organization earlier today. Wanted me to setup an account. I said that since flash crashes had moved from equities to the FX market, I was more than a little hesitant to do so, as even a rather small move can entirely eradicate your account (who trades FX without margin???).

He partially agreed, but was still trying the sales tactics on - suggesting stop loss triggers (which I suppose can actually make the situation worse). Not that I blame him, that's what he's there to do, and he was good to chat to.

Mon, 10/25/2010 - 15:58 | 675993 threefingerscam
threefingerscam's picture

Current host is sucked dry, must find new host to survive....

 

Mon, 10/25/2010 - 16:29 | 675979 TumblingDice
TumblingDice's picture

I would blame the flash crash mainly on the ruckus Bernie Sanders(among others) was raising about auditing the cartel.

Mon, 10/25/2010 - 17:21 | 676157 TheJudge2012
TheJudge2012's picture

Traitor Bernie, who sponsored Ron Paul's Fed audit bill in the senate, sold out to the big banks and supported the watered-down version instead.

Mon, 10/25/2010 - 15:57 | 675991 Herd Redirectio...
Herd Redirection Committee's picture

Accountability and transparency,  two things the crazy world needs a whole lot more of!

These two things would go a LONG way to solving our problems, or at the very least, getting them out in the open.

We need the return of the rule of law, not the current system with its two sets of rules!

http://psychonews.site90.net

Mon, 10/25/2010 - 15:59 | 675994 RobotTrader
RobotTrader's picture

Algos are "flash bidding" RIMM into the bell.

Mon, 10/25/2010 - 16:01 | 675999 EscapeKey
EscapeKey's picture

Oh, Robo, and how about Gold. How is Gold doing today?

Mon, 10/25/2010 - 16:17 | 676030 RobotTrader
RobotTrader's picture

Terrible action today on this one...

People getting caught knife catching this morning.

Mon, 10/25/2010 - 16:28 | 676066 tmosley
tmosley's picture

That's not gold, Robo.  

How's gold doing, Robo?

Mon, 10/25/2010 - 16:33 | 676082 What_Me_Worry
What_Me_Worry's picture

He's a robot, obviously.  He can't respond to you unless you ask in binary.  He's only programmed to show pics of women and charts of dog stocks shooting the moon.

Mon, 10/25/2010 - 16:49 | 676107 Herd Redirectio...
Herd Redirection Committee's picture

LOL, its up 1%, i.e. the US dollar buys less gold today than it did yesterday.

Tue, 10/26/2010 - 05:35 | 676648 EscapeKey
EscapeKey's picture

.

Mon, 10/25/2010 - 16:01 | 676000 Bill Lumbergh
Bill Lumbergh's picture

Must be some political heat now to say the right things...when those HFT computers are ripped out of the exchanges and thrown in the dumpsters out back then I will believe change is afoot.

Mon, 10/25/2010 - 16:15 | 676027 Temporalist
Temporalist's picture

First ever negative treasury yield!!! Hooray!!!

Chilton said he'd make a statement about the gold and silver inquiry and FOIA from GATA.  Still waiting on that.

Mon, 10/25/2010 - 16:39 | 676095 Troy Ounce
Troy Ounce's picture

 

 

Chilton has been told the water in the Hudson is cold and cement shoes heavy...

http://t2.gstatic.com/images?q=tbn:DhWuQgcJL62J8M:http://i37.photobucket...

 

 

Mon, 10/25/2010 - 16:37 | 676091 outamyeffinway
outamyeffinway's picture

Chilton: all talk, no walk bullshitter.

Mon, 10/25/2010 - 17:03 | 676131 redpill
redpill's picture

Obviously he's just a shill for Waddell & Reed and their devious scheme to destroy the U.S. economy.

Mon, 10/25/2010 - 17:42 | 676184 gwar5
gwar5's picture

No more Waddell and Reed? Progress.

Mon, 10/25/2010 - 19:28 | 676356 Browns Bottom
Browns Bottom's picture

But won't JPM's short position (gold and silver) be covered by the Fed/US Treasury, so there so there will be no impact on JPM's Profit and Loss account (or Balance Sheet) ?

In other words, the US tax payer will cover the losses.

Mon, 10/25/2010 - 21:11 | 676578 Fast Twitch
Fast Twitch's picture

Shout out! to "surfer dude" Bart Chilton. Position limits will be as healthy as speed limits. Even Ferrari's have to obey the law. And everyone's safety is respected...

Mon, 10/25/2010 - 21:24 | 676610 TheGoodDoctor
TheGoodDoctor's picture

Wow. Chilton's got balls. Now if he would only step it up on the silver manipulation we might actually feel like our markets are safe and true.

Mon, 10/25/2010 - 21:27 | 676614 Slewburger
Slewburger's picture

WTF are the position limits????

Mon, 10/25/2010 - 21:33 | 676620 Kina
Kina's picture

One can only hope that in the end the weight of gold breaks the back of JPM and pops their little brains out through their eye sockets.

Mon, 10/25/2010 - 22:04 | 676679 MilleniumJane
MilleniumJane's picture

Who the hell junked you for that?  Your comment was funny and brought a smile to my face :)  I loved the visual!

Mon, 10/25/2010 - 22:39 | 676752 GoinFawr
GoinFawr's picture

Me too, but the 'eyes' needed to be 'beady' and I would have liked to have seen 'skeevy little hearts ripped out' at some point too. Not criticizing though, enjoyed it immensely as is.

Mon, 10/25/2010 - 22:53 | 676781 Trifecta Man
Trifecta Man's picture

Clean your own house, Chilton.

Mon, 10/25/2010 - 23:37 | 676839 Dixie Normous
Dixie Normous's picture

So flash blasting to the upside is not a problem?  Has this tool seen Cotton?

Mon, 10/25/2010 - 23:43 | 676845 Slewburger
Slewburger's picture

Tyler, How about linking the web cast of tomorrows CFTC open meeting ???

http://www.cftc.gov/PressRoom/PressReleases/pr5926-10.html

 

Do NOT follow this link or you will be banned from the site!