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.