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This Is The HFT "Malfunction" That "Roiled" The Market And Cost Citadel $70,000
Back on June 3, 2013, following what was merely the latest observation of how broken the market is thanks to central banks manipulation and HFT rigging, we wrote the following:
Why did the E-Mini just dump by 6 points on no news following the 6pm resumption of trading? Why not.
Maybe someone hacked the vacuum tubes' calendar file and instead of Tuesday has pegged tomorrow as a Wednesday which takes away any "fundamental" reason to ramp futures and stocks (or perhaps someone leaked that after Tuesday we get a Wednesday when nothing levitationally magical happens, which however makes no sense: after all someone could just as easily refute that rumor with another rumor that yet another Tuesday will follow a week from tomorrow, offsetting the Wednesday rumor).
That, or your run of the mill fat finger.
Or, worst case, someone actually, gulp, selling with premeditated intent (which in the new normal is at least a 2nd degree felony, somewhere up there alongside marketslaughter).
And as happens with nearly 100% regularity nowadays, our snarky commentary on what takes place behind the scenes was once again almost 100% accurate. Because earlier today we learned precisely what happened.
Not surprisingly, it was an HFT, and it was premeditated selling, if only by a rogue algo, which as Bloomberg earlier described "roiled S&P futures." The guilty party was none other than the NY Fed's favorite hedge fund, the one which the Plunge Protection Team "uses" to buy E-minis at key downward inflection points. From Bloomberg:
Citadel Fined for Software Bug That Roiled S&P Futures
Citadel LLC was fined $70,000 by CME Group Inc. for roiling Standard & Poor’s 500 Index futures trading in June 2013, an event triggered by a software bug at the firm. The hedge fund firm’s Citadel Securities division unintentionally placed trades that had already been executed, causing “an atypical short-term increase in trading volume” that swayed prices for E-mini futures on the S&P 500, CME Group said in a disciplinary action released Monday. Citadel didn’t admit or deny breaking the exchange’s rules. Katie Spring, a spokeswoman for Chicago-based Citadel, declined to comment. The malfunction lasted only about a minute, underscoring how quickly computerized trading systems can run amok
Yes, just one "hedge fund", the one with the highest leverage in the world, moved the S&P by 6 points, or about 0.3%, just because of an HFT "server software malfunction." Yes, the 9x regulatory, and highest in the world, leverage helps when just one hedge fund is mandated to move the entire market.
And the biggest sarcasm of all: Citadel's rogue selling wasn't a "2nd degree felony" but it was close, and was what CME dubbed a market "offense." From the CME:
Pursuant to an offer of settlement in which Citadel Securities LLC (“Citadel”) neither admitted nor denied the rule violations upon which the penalty is based, on March 19, 2015, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that it had jurisdiction over Citadel pursuant to Rules 400 and 402 as the conduct occurred while Citadel was a CME member, and during an approximately one-minute period on June 3, 2013, Citadel entered a series of unintentional orders on the Globex electronic trading platform.
What exactly caused the "roiling"?
This unintentional order entry activity was caused by a software malfunction in a server that Citadel used to route orders to the Exchange. As a result of this malfunction, Citadel resent to the Exchange for execution orders that had previously been filled, which in turn caused an atypical short-term increase in trading volume and impacted the price in the E-mini S&P Futures market.
And the penalty?
The Panel concluded that Citadel thereby violated CME Rule 432.Q. In accordance with the settlement offer, the Panel ordered Citadel to pay a fine of $70,000.
Or what Citadel earns in about 100 milliseconds of market rigging.
And to think, all of these market rigging unpleasantness could have been avoided, if only Citadel's "software malfunction" had led to buying instead of selling.
Oh well, lesson learned.
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Surely this opens them up to being sued by people who's stops were triggered by this?
70,000 , 70,000 man, were talking 70,000 come on man we are talking 70,000....
alan iverson
Practice? Who needs practice?
these market riggers spend 70k on dinners a week, come on now.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Crime pays and the FED has a money tree.
And should anyone from a regulatory agency be reading my comment, I wanted to have you read the story above for clues as to why I no longer participating as a buyer, seller, or holder of US equities. I'll be happy staying in investment vehicles which are unrigged and market driven.
If you ever want me and my confidence back, you'll need to either ban or meaningfully tax HFT (i.e. $0.25 per order).
Even $ 0,01 would stop this silly shitshow
They probably needed the CFTC to determine factually that the trades were unintentional so that they could be busted (since they were probably losing trades.) They probably save $1 mil in busted trades and got fined $70k.
70k is a rounding error to these cocksuckers...
Think hard kids. They moved the market .3% by accident. This means they have the abilities to, when needed, drive the market by much much more than that over sustained periods of time. That's why the free market died a long time ago. This casino is rigged! If you play you're an idiot.
What would end all of this Bullshit, is a new rule that states all equities & bond purchases must be held for 5 business days. That's it, end of problem.
I only wish this was true. But, the FED has printed up trillions and given it to the boyz. They now have the ability to ride out a lot. Mag 7 earthquake in Japan? The markets go fucking up! None stop blizzards along the east coast, no problems. Bad BLS numbers, completely absorbed. This market will NOT go down 10%, capisch?
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I don't think a hedge fund manager would even bother to bend down to pick up $70,000.00. He would lose too much money by taking time to bend over and scoop it up.....
That 'software malfunction' could well be the standard stop-hunt algo strategy.
But in any case, of big importance here is, that it's now official, yet another conspiracy fact, that even a single HFT shop is able to single handedly produce such stop-hunt like moves in one of the biggest markets in the world. And of course, it's just the tip of the iceberg, we've enough evidence to be able to say that.
That dual-citizen Fed main man Stanley Fischer is systematically denying FX manipulation is also interesting. A bit reminiscent of the Fed's denial of the housing market problems. This kind of systematical denial, especially from a potential zionist, is all the more reason to believe that the global FX market maker network is some sort of dual purpose price fixing and rigged casino operation.
70k? Is that not what some tart keeps writing on here that her mates earn in few hours part time on a computer?
"We are here to collect the fine!"
"Please see Gladys at the reception desk, and she will pay you out of petty cash."
Cool. They can reprogram they thing within one minute. Must be a really fast human to even be able to turn it off that quickly.
In the second half, Max interviews Aleksandar Vidovic of Salviol about the size of the financial fraud market and what his company is doing to shrink it. https://www.youtube.com/watch?v=HjNE0HYq8lo
The sanctioned action took place in 2013? What took so long?
Would there have been a "problem" if the mistake was on the buy side?
www.traderzoo.mobi
Rig! Baby. Rig!