Commodity Futures Trading Commission

"Reprehensible" Lloyds Bank Agrees To $105 Million Wristslap For Manipulating Libor

That will teach them! Having received full credit for for co-operation and suspending some individuals, Lloyds Bank has been fined the staggeringly wrist-slap-like sum of $105 million for the "manipulation, attempted manipulation, and false reporting of Libor." As WSJ reports, the British bank becomes the seventh financial institution to strike a deal with U.S. and U.K. authorities who are conducting a long running probe into allegations of widespread attempts to manipulate Libor. With no less than the head of the Bank of England calling the bank's actions (mainpulating JPY Libor for at least 2 years) "reprehensible," and the CFTC adds individuals bevahior was a "gross breach of trust." Well we are sure after this they will never manipulate another market ever again...

A Revolving Door Farce: CFTC Commissioner Bails To Head Regulator's Biggest Opponent

There is no better way to describe what the recently departed CFTC commissioner Scott O'Malia just did when he bailed from the commodity watchdog to become the new head of the International Swaps and Derivatives Association, aka ISDA, the biggest banking group that has constantly opposed every intervention and attempt to regulate the swaps market by the CFTC since the Lehman crisis, than an epic farce.

These Are The 10 "Liquidity-Providing" HFT Firms The SEC Is Investigating

Despite a full court press of PR to confirm HFT firms are friends of retail investors and do no wrong; the SEC, it appears, sees it differently. While Mary White has confidently explained the market is not rigged, her agency is now actively seeking tips, complaints, or referrals that show, as The Chicago Tribune reports, evidence of abuse of order types, as well as traditional forms of abusive trading like "layering" or "spoofing" and other issues relating to high-frequency trading that might be violations of the law. Here are the 10 firms (including poster child holy-grail trader Virtu Financial) that the SEC is probing... can you spot the oddly missing one...

Even The CME Is Getting Tired Of Silver Manipulation

Everyone has seen them: those "inexplicable" bouts of furious selling in gold and silver, coming out of nowhere with no news or catalyst. In fact, look no further than what happened first thing this morning, when an unknown seller, smashed all stops in one big sale, and took silver to its lowest price for 2014.  This was a premeditated and deliberate selling of silver with one simple purpose: push and reprice silver lower. But this is nothing new: precious metal traders, especially those who are on the other side of the table of the BIS' Mikael Charoze or Benoit Gilson, and countless other commercial banks, are all too aware of this behavior and they take it for granted.  No, the real surprise is that suddenly none other than the CME is getting worred that manipulation this blatant is finally chasing regular retail traders away who are tired of being fleeced on a daily basis, leaving central banks and a few "fixing" banks to trade only with each other, which is not acceptable - after all it is the muppets' money that is fair game, not that of other cartel members. 

Bart Chilton Joins America's Largest Law Firm As Policy Advisor

It seems like it was only yesterday (actually it was early November) when infamous CFTC commissioner, legendary threat to gold manipulators nowhere, and Alexander Godunov impersonator, Bart Chilton made a very dramatic exit stage left. At the time, we asked rhetorically if said dramatic depature was just for show. The rhetorical answer to the rhetorical question: of course it was, confirmed moments ago when Chilton became just the latest "regulator" to take the great revolving door out of a worthless public service Washington office into a just as worthless, but much better paying private-sector Washington office. Presenting the latest employee of DLA Piper, the largest law firm in the US, and possibly the world, by number of partners - Bart Chilton, poet.

SEC Busts HFT Firms For "Tricking People Into Trading At Artificial Prices"

On Monday, in "High Frequency Trading: Why Now And What Happens Next" we predicted that "the high freaks are about to become the most convenient, and "misunderstood" scapegoat, for when the market finally does crash. Which means that those HFT-associated terms which very few recognize now, especially those on either side of the pro/anti-HFT debate who have very strong opinions but zero factual grasp of the matter, such as the following:

  • Layering: multiple, large orders are placed passively with the goal of “pushing” the book away

Of course, another name for "layering" is "spoofing" which is precisely the term that the SEC used today when it announced that it charged the owner of a New Jersey-based trading firm and several other defendants "in a scheme to manipulate the market through an illegal practice known as "spoofing."

DoJ Confirms "Insider Trading" Probe Of HFT

And all it took for the FBI, the SEC and now the DOJ to figure out the casino was rigged all along, was for a Michael Lewis book to do their job for them.

  • DOJ PROBING HIGH SPEED TRADING FOR INSIDER TRADING: REUTERS

SEC Has Opened Several HFT Probes

To think all it took to wake up not only the FBI (which generously provided a phone number to all interested parties so others could do its work for it) but the porn-addicts at the most corrupt, complicit and clueless, not to mention bought and paid for, "regulator" in US history, the SEC from a five year slumber - yes, we started warning about HFT in April of 2009 - was one Michael Lewis book. Moments ago we learned that the SEC, with a five year delay, has opened several investigations into HFT.

CFTC Investigates The "Secret" HFT-Exchange Incentive Programs

It would appear that yesterday's announcement by NY AG Schneiderman (who appeared to find Virtu's practically flawless trading record too much to bear) has prompted further investigations into HFT shenanigans by regulators. As WSJ reports, regulators are taking aim at the relationship between high-frequency trading firms and major exchanges, examining whether the preferential treatment market operators offer the firms puts other investors at a disadvantage. The CFTC probe is focused on complicated, often opaque incentive programs that give high-volume trading firms financial benefits such as discounts on fees the exchanges charge to execute trades.

Frontrunning: March 5

  • High Stakes Limit Bid to Cow Putin (WSJ)
  • Russia says can't control Crimea troops ahead of U.S. talks (Reuters)
  • Crimea Crisis Haunted by Ghosts of Bungled World War I Diplomacy (BBG)
  • Putin’s Ukraine Gambit Hurts Economy as Allies Lose Billions  (BBG)
  • Germany Says It Provided Equipment and Training to Ukraine's Riot Police (WSJ)
  • China signals focus on reforms and leaner, cleaner growth (Reuters)
  • China Shares in Hong Kong Decline Amid Default Concern (BBG)
  • Beijing Signals New Worry on Growth (WSJ)

Hedge Funds Most Short Into Latest All Time High Ramp Since September 2012

As we have repeatedly pointed out, the one surest way to generate profits in these manipulated, broken markets is to take advantage of the one legacy trade that makes zero sense in a world in which the global central banks are the ultimate providers of downside risk protection: i.e., going long the most shorted names. We did just this most recently past Friday, when we listed the latest hedge fund long hotel, as well as the names most shorted by the "sophisticated" investors, saying "anyone going long these names is virtually assured to outperform the market over the next year." One day later and this "strategy" is already generating outsized alpha, with the most shorted names solidly outperforming the market. And as the case may, this latest bout of "most shorted" outperformance is set to continue for one main reason. As the CFTC reported last friday, institutional investors using Standard & Poor’s 500 Index futures turned bearish this month for the first time since September 2012.

Frontrunning: February 11

  • Frustrated by Karzai, U.S. Shifts Afghanistan Exit Plans (WSJ)
  • Yellen Testimony Guide From Payrolls Report to Emerging Markets (BBG)
  • Gold hits three-month high, shares up ahead of Yellen (Reuters)
  • Tightfisted New Owners Put Heinz on Diet (WSJ)
  • Senator describes "gruesome" bin Laden photos (Reuters)
  • More reasons for the ongoing economic contraction: U.S. Winter Storm Seen Spreading Snow, Sleet Across South (BBG)
  • Barclays Cuts Up to 12,000 Jobs as Quarterly Profit Falls  (BBG)
  • Boeing Considering 787-Size Medium-Range Jetliners (WSJ)
  • AOL Chief Apologizes for ‘Distressed Babies’ Comment (BBG)