Over the years many have wondered how it was possible that a hedge fund could exist that did nothing more than ride momentum and heatmaps higher or lower without almost any insight into the fundamentals of the underlying corporations. That hedge funds, of course, is John A. Thaler's JAT Capital, which did nothing but buy the most talked about, "storied" momo stocks and ride them higher. Or lower, as the case may be. Because the hedge fund which only managed $3.7 billion as of March 31 just because it was a Tiger Management spin off, is no more.
If the DOJ and CFTC is going to be consistent, then they have to indict the entire financial community from the CME, Exchanges, Brokers, Institutions, Investment Banks, Hedge Funds, Management Funds and High Frequency Trading Firms.
Today, we find precisely how and why Sarao was singled out: he not only ratted out the parasitic trading strategies of the real culprits behind the broken market, the massive HFT firms (such as Virtu which just went public just a day before the Sarao charges were filed) which gave the "regulators" no choice: one of them had to be put away for good, but found a way to capitalize on the algos' stupidity, and actually make money by beating them at their own game. As such, regulators and exchanges such as the CFTC and CME had no choice but arrest him and prevent him from trading ever again!
Behold The Patsy: First Photograph Emerges Of The "Criminal Mastermind" Reponsible For The Flash CrashSubmitted by Tyler Durden on 04/22/2015 12:02 -0400
There have been precious few actual glimpses of the infamous flash crash mastermind who has seemingly kept a very low public profile, but moments ago the first sketch emerged of him during his court appearance. As the NYT reports, "appearing in court in London dressed in a canary yellow sweatshirt and white track suit pants, the trader, Navinder Singh Sarao, a British national, sat behind a glass wall looking dazed by the proceedings around him." We, too would be dazed by the stupidity of the CFTC, if faced with the same ridiculous charge. And moments ago, the Telegraph ran the first actual photo of the "criminal mastermind."
"Defendants' use of the Layering Algorithm and the 188/289-Lot Spoofing intensified throughout the day. At 11:17 a.m. CT, Defendants turned the Layering Algorithm on for more than two consecutive hours, until 1 :40 p.m. CT. During this cycle, Defendants utilized the Layering Algorithm to place five orders, totaling 3,000 contracts. A sixth order was added at around 1:13 p.m. CT, increasing the total to 3,600 contracts.... Between 11:17 a.m. CT and 1:40 p.m. CT, Defendants' actions contributed to an extreme order book imbalance in the E-mini S&P market. This order book imbalance contributed to market conditions that caused theE-mini S&P price to fall361 basis points."
- FUTURES TRADER ARRESTED FOR ALLEGED ROLE IN 2010 FLASH CRASH
- FUTURES TRADER CHARGED WITH ILLEGALLY MANIPULATING STOCK MKT
- SARAO HAS BEEN CHARGED WITH COMMODITIES, WIRE FRAUD: GOELMAN
- SARAO WAS ARRESTED AT HIS HOME IN LONDON TODAY, GOELMAN SAYS
- CFTC FILES CIVIL CASE AGAINST NAVINDER SINGH SARAO
Here is Bernanke's new job: to make sure that Citadel's 7.4x leverage only keeps rising, and that its "true" regulatory assets of $175.8 billion follow. Because if there is one thing Bernanke has experience with, it's lots and lots of leverage.
Back in 2009, when aside from a few insiders, nobody had heard of HFT, Zero Hedge launched its crusade to expose the algorithmic scourge that has since then caused an equity, treasury and now US Dollar flash crash, and has been the subject of a Michael Lewis bestseller and resulted in countless market halts and failures. More importantly, there is now roughly 50 pages of just bibliography citing the evidence-based, academic research that has shown just how pervsavibely, maliciously and premeditatedly HFTs manipulate, destabilize, impair and otherwise destroy every single market in which they participate.
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The Fed has been supporting the market since the late 1980s. But there is an important difference between the actions of the Fed under Yellen versus Greenspan and Bernanke. In 2008, the Fed allowed Bear Stearns and Lehman Brothers to fail. Given the massive wipeout that followed, this decision is now viewed as a dangerous mistake. Having learned their lesson, the Fed is now rushing in to support the market in response to even routine 20% drops. In this way, the Fed is acting like a value investor who demands a small margin of safety before investing.... Since 2010, however, the Fed has changed tactics. The Fed is now reacting far more quickly. Small market selloffs are followed by immediate responses. By quickly riding to the rescue, the Fed is effectively front-running value investors.
Here's why bankers are the ones driving Lamborghinis and not farmers as Jim Rogers has been saying
"As humans struggled to understand what nuance, if any, existed between the two catch phrases, the automated computer programs that do so much of the trading these days immediately reacted and so stocks and Treasuries shot higher in tandem. Did the machines start a buying binge after a simple, successful search for “considerable time?” It’s possible, according to Paul Tetlock, an associate professor at Columbia Business School, who has researched how stocks react to news stories."
By now everyone has heard of the NY Fed's most famous employee (who did not work at Goldman Sachs previously): Kevin Henry, who according to his latest LinkedIn profile was recently promoted to Senior Associate at the Capital Markets desk at the NY Fed (and if they haven't, a refresh can be found here, here and here). Which is fine: Kevin deserves all the recognition and accolades that are due to anyone who manages to centrally-plan the world's biggest bond market. Because after all that's what the Fed does: it intervenes in the bond market. Nothing strange about that. And yet we have one question: why does Kevin seem to exhibit an absolute fascination when it comes to equity ETFs?
This is the first installment in a series of HFT War Stories, submitted anonymously by high frequency and algorithmic traders highlighting the perils of their profession. Today we look at a $2 Billion near miss that never made the news. The public only hears about these types of SNAFUs if they blow up a firm. Hundreds more go unnoticed by anyone but the traders who lived through them.
Goldman FX Trader Fired For Participating In Currency-Rigging Cartel Even As Goldman Avoids Any ChargesSubmitted by Tyler Durden on 11/18/2014 16:35 -0400
Moments ago the WSJ reported that Goldman Sachs - which managed to go unscathed in the recent currency market rigging settlement - just fired a currencies trader who "allegedly was involved with the misconduct before he joined the firm." So how is it possible that Goldman, which housed one of "The Cartel's" (or was it Bandits?) riggers, was never busted in the first place? Because apparently Goldman had no clue of his impeccable FX-rigging chat room credentials when it hired him from HSBC back in 2012, credentials which he allegedly never again used while employed by Goldman because the moment he walked through the door at 200 West, he was a changed man, doing merely god's work and nobody else's.