This page has been archived and commenting is disabled.
Russian College Dropout Busted For 1,316 Spoofs Of Everything From E-Minis, To Copper, To VIX
Another day, another "crackdown" by the CFTC on an "evil spoofing mastermind."
No, not Virtu, not Citadel acting as a proxy agent for the Federal Reserve Bank of New York, not any of the thousands of frontrunning HFT firms operating behind the scenes as prop-traders pretending to provide liquidity, and not even even your token Indian working out of his parents' London basement blamed for the May 2010 flash crash, but a 33-year old college dropout called Igor Oystacher, co-founder of Chicago-based 3 Red Group.
Igor Oystacher, photo courtesy of the WSJ
At his various trading firms, Igor, who came to Chicago from Moscow and who entered Northwestern Universiry in 1999 to drop out after three semesters, had acquired various nicknames including "Snuggles" and "The Pig", but his best one was also the simplest: "The Russian."
According to an previous profile of Oystacher by the WSJ whose legal case had been in the public domain for months, "he started an internship at Gelber Group LLC, a prominent Chicago trading firm that cultivated a laid-back atmosphere where traders often dressed in T-shirts and flip-flops, say people who knew him at the time. Brian Gelber, the firm’s founder, declines to comment."
Mr. Oystacher stood out for his quick grasp of market psychology. “He was successful within a year of starting,” a former Gelber trader says. “He was putting up numbers it takes people three or four years to get to when they are starting out.”
His aggressive trading, often in stock-index futures, drew attention in the trading community, where some dubbed him “The Russian.”
“He’s been talked about for years,” says John Lothian, a former Chicago futures broker who publishes an exchange-industry newsletter.
Within Gelber, he earned nicknames like “Snuggles” and “The Pig,” although former colleagues say they aren’t sure why. He had down periods: After the 2010 Flash Crash, when the Dow Jones Industrial Average fell nearly 1,000 points before recovering, he told friends he lost significant money on a series of trades.
He left Gelber in 2010. In 2013, the firm agreed to pay a $750,000 fine to the CFTC over orders in 2009 and 2010 that an unidentified trader entered and canceled, allegedly to affect the price of a stock-index future, a CFTC news release says. Gelber didn’t admit or deny the charges in accepting the settlement.
In 2011, Mr. Oystacher and another Gelber trader, Edwin Johnson, started their own firm in temporary space in the old Chicago Board of Trade. They named it 3Red Group after the three red chairs they and another early employee used.
Mr. Oystacher continued to make an outsize mark on futures markets. On one day in 2012, for instance, he traded more than 80,000 E-Mini S&P 500 futures—a type of contract on the stock index—with a combined notional value of nearly $6 billion, trading records show. His trading could sway markets, traders say.
And so he did, but not in the normal way, but mostly through the familiar practice of spoofing, whereby a trader telegraphs a large position on one side of the orderbook, usually just below or above the NBBO, ready to cancel them at a millisecond's notice should the market move against him, and when the market moves his way, immediately takes the other side of the trade.
After years of ignoring such manipulative activity, regulators noticed: the CFTC began investigating the trading of Mr. Oystacher and 3 Red in 2011. Among the exhibits is a 2013 letter from a senior CFTC trial attorney, Jon Kramer, including a subpoena for 3Red. Mr. Kramer declines to comment.
In November 2014, the CME fined him $150,000 and banned him from trading on the exchange during December 2014. Mr. Oystacher didn’t admit or deny any rule violations in agreeing to the fine and trading ban, the CME notice says.
Then earlier today, in a repeat of the crackdown against that other "evil spoofing mastermind" Navinder Sarao, the CFTC charged Oystacher, and his trading firm 3 Red "with Spoofing and Employment of a Manipulative and Deceptive Device while Trading E-Mini S&P 500, Copper, Crude Oil, Natural Gas, and VIX Futures Contracts."
According to the CFTC Complaint, on at least 51 trading days between December 2011 and January 2014, Oystacher and 3 Red intentionally and repeatedly engaged in a manipulative and deceptive spoofing scheme while trading in at least five futures products on at least four exchanges: the E-Mini S&P 500 (S&P 500) futures contracts on the Chicago Mercantile Exchange (CME); crude oil and natural gas futures contracts on the New York Mercantile Exchange (NYMEX); copper futures contracts on the Commodity Exchange Inc. (COMEX); and the volatility index (VIX) futures contract on CBOE Futures Exchange (CFE). The Complaint explains that their scheme created the appearance of false market depth that Oystacher and 3 Red exploited to benefit their own interests, while harming other market participants.
Frequent readers are very familiar with not only the mechanics of spoofing but how it is abused. For those unfamiliar with spoofing, the following WSJ diagram lays it out:
Curiously, those who have been charged are usually lone human traders, when ironically the biggest spoofing culprit are nameless, faceless algos, or the hedge funds behind them, and one name in particular: Chicago's Citadel.
But we digress. Here is what Aitan Goelman, the CFTC’s Director of Enforcement, commented: “Spoofing seriously threatens the integrity and stability of futures markets because it discourages legitimate market participants from trading. The CFTC is committed to prosecuting this conduct and is actively cooperating with regulators around the world in this endeavor.”
In the case of "The Russian", there clearly was a lot of spoofing. As the following table from the charging document reveals, on at least 51 trading days, Igor was spoofing everything from copper, to crude oil, to gas, to VIX, to E-Minis, for a total of 1,316 spoofing incidents from 359,790 contracts.
While the rest of the complaint does not reveal anything else we didn't already know, like for example why do regulators focus almost exclusively on foreigners or those who are otherwise Wall Street "outsiders", it does reveals something amusing: the average duration of spoof events which Igor engaged in. As the following table shows, the average spoof had a duration of well under 1 second, or 0.693 seconds to be precise, in order to confuse not so much human traders but HFT algos on the other side who are used to dealing with other algos but not with human interlopers such as Igor, who found the weakness in the algo methodology and abused it to make profits over the years.
There is much more detail in the actual document on just how Igor and others like him constantly spoof virtually every futures market in existence: we urge readers to skim it in case they need any further validation why the market remains broken and why despite spoofing having been clearly barred, continues to this day.
Oh yes, for those who were unaware, Dodd Frank made spoofing illegal in 2010. Five years later it takes place every single day.
Why was Igor the latest to be thrown under the bus instead of some HFT firm? Well, just like Nav Sarao he had found the glitch in the HFT market rigging system, and was outmanipulating the manipulators. He had to be put away.
And while the CFTC may have thrown the book at "The Russian" today, courtesy of Nanex we present a glaringly obvious instance of spoofing in the E-mini from just this past Thursday, one clearly taking place with the help of 2000-contract lots.
Spoofing in S&P 500 futures just last week $ES_F $SPY pic.twitter.com/yTx40S3glY
— Eric Scott Hunsader (@nanexllc) October 19, 2015
Will the CFTC crack down on these daily ongoing and very illegal instances of market manipulation, which are now beyond obvious to everyone who still has a passing interest in the markets? Well, if the perpetrator is some Russian or Indian, of course. If the name of the culprit, however, is Citadel, then absolutely not. After all the NY Fed has to maintain its control over the market's microstructure somehow.
Source: CFTC
»
- 27515 reads
- Printer-friendly version
- Send to friend
- advertisements -
With a name like Oystercatcher, he's got to be guilty.
What upsets me so much about all of this is the people in charge don't realise they're fucking gangster scum. They believe they're good, honest people helping to keep the markets generally 'moral'.
Open an ice cream stand in Little Italy and pay the weekly protection and you'll be all right. But the gangsters receiving the cash don't pretend they're anything they're not.
Spoof the markets in reasonable size and if you're not paying the authorities (not in cash, but political donations and/or jobs in the future) and you're fucked.
Still, justice will ultimately be served as the hottest fires in hell await hypocrites.
wake me when they bust a jew... lol
Madoff?
he confessed.
Madoff ripped off jews...
Poor guy. Wasn't big enough not to fail.
Every brokerage firm does this but they can fractionalize inhouse shares....markets...eh? Guess the Russian didnt steal enough from the pleebs.
RIPS
Poor guy??
Wait a minute here.
Ok Spoofing is not allowed, Citadel spoofs the market on daily bases and nothing is done against it.
Now, one guy manipulates the manipulators and keeps this secret to him self. He gets in jail.
He should have shared his knowledge in first place. I bet there are others who know how to do this and keep it for them self. Those will be in jail soon to. I still wonder why don't they share their knowledge how to outmanipulate manipulators? Because if suddenly THOUSANDS have the knowledge, Citadel will close their shop soon enough because the CFTC and FBI and all others certainly not going to do it. If suddenly thousands start to outmanipulate the manipulators like Citadel then suddenly they will go broke.
Just the way I think
I look at his face and think Jew, then I look at the name Oystacher.... not very Russian at all.
http://i2.kym-cdn.com/photos/images/facebook/000/876/329/33e.jpg
Holy cow batman ...Vice President Joe Biden will enter the presidential race, according to media reports filed on Monday.
sit back and watch HRC unleash her dirt ....HE HAS MY VOTE!
...gafaw...gafaw...gafaw....
What more do you need to know?
http://gfycat.com/FlippantSpecificAidi
http://joebiden.info/
There is a new definition for the term "Penny Pincher" Lol
if you're a random trader spoofing manually, you get busted and sent to jail. but if you're some big fee paying co-locating HFT firm spoofing all day long as a part of your "market making" and "liquidity providing" operations, it's not a problem and overlooked. What a joke.
Not a joke. A ploy.
We should quit pretending these guys do not know exactly what they are doing all of the time.
It is not illegal for a machine to "spoof". Them laws is written for "people" to be doing something.
Honest
I'm sorta surprised more people haven't figured that out by now.
Oh sure, uh-huh, yeppers, that's him, bookem Dano...
Company has "Red" in the name. Obviously a communist front. NSA caught that one real quick, that's right.
Proud to be a Mercan.
'N-it was a conspiracy with 3 of 'em! Dead giveaway, weren't it!
Got 'em good!
With that out of the way, markets should have no problem going back to finding new all time highs on a daily basis
3com was already taken.
why do you call him russian? he is not russian but a russian jew
So you think the feds made a mistake? Seems unlikely they would get wrong a detail like that.
if a small jew steals the money of a big jew he gets arrested . if a small jew steals the money of a non-jew its ok .
they warned him once and gave him a little fine:
"In November 2014, the CME fined him $150,000 and banned him from trading on the exchange during December 2014. Mr. Oystacher didn’t admit or deny any rule violations in agreeing to the fine and trading ban, the CME notice says."
edit: wow 5 downvotes... you guys are sick in the head
1) a lot of jews are named oystacher the short form of oystacher is stacher
here an example of a criminal jew
joseph stacher
Joseph "Doc" Stacher (b. 1902-d. 1977) was a Jewish syndicate leader who helped bring together the Jewish and Italian Mafia into a national organized crime syndicate.
Born in Letichev, Ukraine around 1902, Stacher (who shortened his name from Oystacher) immigrated with his family to the United States in 1912. As a teenager living in Newark, New Jersey he became known as a pushcart thief, later befriending future Jewish gangsters such as Meyer Lansky and Abner Zwillman. He "was the fat boy that every gang needs. Short and boastful, Joe Stacher shared Meyer's fondness for craps, and he had no hesitation in claiming to be the better player."[1]
By the 1920s Stacher was running much of Zwillman's gambling operations.In 1931, Stacher helped Meyer Lansky organize a conference of Jewish organized crime leaders at the Franconia Hotel, which later would see the alleged merging of the Jewish and Italian Mafia into a national crime syndicate. Running West Coast and Caribbean gambling operations for Lansky during the 1930s, as well as becoming a silent partner of movie studio Columbia Pictures in the late 1930s, Stacher would later supervise gambling in Las Vegas, Nevada, particularly the Sands and Fremont Casinos.
Stacher continued running Mafia gambling operations until 1964, when Federal authorities arrested him for tax evasion. While the US government was in favor of deporting him to his native Poland, federal law prohibited deporting anyone to a communist-controlled country. However, because of the "Law of Return", Stacher was allowed citizenship in Israel and successfully immigrated there in 1965.
While living in Israel he served as the primary source of Israeli journalists Dennis Eisenberg, Uri Dan, and Eli Landau for a biography of Meyer Lansky. Stacher continued living in Israel until his death. He died, according to some reports, under mysterious circumstances[clarification needed] in a Munich, West Germany, hotel room on February 28, 1977. His death was reported as a heart attack and his body shipped back to Israel. He was buried secretly and the nameplate of his grave was altered to hide his burial site. Only eight men were at the funeral, so the family had to ask a reporter and photographer to join the ceremony in order to attain a minyan.
typical criminal jew
i can bring you more example if you want, but it seems im no longer welcomed on zh anymore. have fun with your children being burger flipper with college degree
Please Explain? I'm only here 1.5 years. Mostly read and observe. Sometimes I see someone named as being banned (vanquished?). On the surface, I see reading the guidelines for comments that just about anything goes. Why then, do people feel unwelcome, banned or deleted? What line must be crossed to merit this response? Just curious.
Except the Feds are always wrong, but never in doubt.
I just said the same thing in another response... Even without looking at his name I thought this guy was a Jew and not a Russian.
When I read the name - Oystacher - it confirmed it for me.
I just said the same thing in another response... Even without looking at his name I thought this guy was a Jew and not a Russian.
When I read the name - Oystacher - it confirmed it for me.
Four recommendations to end spoofing .... pen, paper, phone, fax
Not even that hard; just make them buy and hold for 1 entire second.
Listen to those pussies snivel when they can't flip that bitch back at you in less than an instant.
some geek will figure out how to beat that too .... oh, I forgot # 5 ....hand signals.
Umm, there are a lot of ways to counteract spoofing. They are intentionally not implemented by our dear regulatory bodies.
You could force traders to hold stocks a minimum amount of time as was previously said. It makes no sense to hold stocks for less than a second except to rip off people or to gamble.
Or you could start charging a fee for placing and cancelling orders. It could be a really small fee and it wouldn't hurt any real investor, yet HFT algos placing and cancelling millions of orders per day would have a problem.
Don't tell me there are no ways to stop this madness, they intentionally don't implement any solutions because those making the rules are bought and paid for, it's criminal behaviour.
Also there's this: http://www.iextrading.com/
It is also human nature and we are all infected with the same disease. It reveals itself only in matters of degrees depending on our sphere of power and influence and our ability or inability "to get away with it". For further info refer to commandments 5-10 (a partial list) and see how well you have passed the test or standard, which if were actually obeyed would equal PEACE.
They would just stack them in micro-second increments and then 'unstack' - repeat as necessary
Russians are bad.
Did Nanex see this?
If you win regularly, expect to be ejected from the casino...
You can't count cards in Las Vegas. Now on to the senates investigation of Fandual and Fantasy Kings.
SO it's bad to make money following the rigged rules of a rigged market?
If I learned anything from investment bankers it is that anything is tolerated as long as it makes you money. It is only when you lose money that it causes a problem for you.
The entire game needs to be ended. There is no uncorrupting the market because it was created as a corrupt institution from the get go.
Hillary had a better futures trader years ago.
Christian scum like Hillery and her tribe are a protected class. Always has been. Wait till they bring back the Inquisition and start burning non Christians for their blood sacrifice.
Hopefully the CFTC does not think that this is going make people think their action is anything but protecting Citadel's state-sponsored criminal racket.
I spent some time in the southwest last week. The Hopi, who were a very civilized and spiritual people would periodically uproot their people and move when, after a time, they became corrupted. This invariably happened when they stayed too long in one location. They felt that the alternatives were to uproot and restart afresh or suffer God's wrath. They had the maturity and will to take the responsibility on themselves. Today's western civilization seems to enjoy wallowing in corruption, with no thought of giving it up and following a better path.
still no spoofing jews. funny how that works. thank god we have the honest jews running the show.otherwise these gentiles will destroy the market.
the law clearly states that nobody beats the algos
Those algos are doing God's work, you know. Widows and orphans. All that.
30 days...
It's not what he did that was bad. It was who he didn't do it for.
Homeless man in drunk tank caught spoofing. CFTC returns to porn surfing.
Let's hope The Onion picks that up and runs with it. I would LMAO.
The big kike Wall Street criminals don't like competition from small fries or goyem!
Actually Oystacher is one of the same, part of the Russian/Israeli Maffiya. As are all the rest of the 3 Red Group.
Snatch... 'ya mean Boris the sneaky fukin Russian'
'These guys are trained to be invisible. I'm sure he is miles away..untraceable.'
'dad...theres a Russian guy here ...wants to talk about a large diamond...
love that flick...
Capital flight from the exchanges is already in full swing. Everyone is buying back their stock, the market is getting thin and eventually will be irrelevant. By allowing favoritism and selling access based on nano-seconds of difference in bandwidth speeds, the exchanges have destroyed the very ecology of their own long-term prosperity.
poster child for Wall Street
Why of course! It was a dropout from Russia not the Federal Reserve and Goldman/JP Morgan manipulating the market. You will have to search high and low to find anyone to believe this bullshit!
All those comments deriding the CFTC (don't deserve their paychecks) must have hit a nerve. Now they're rampaging around netting guppies while bankster-backed whales cruise through sucking up all the krill.
To play devil's advocate, there's nothing fundamentally bad in spoofing. All it does is exploiting the greed of others who are then starting to attempt to front-run the spoofer. Nobody is forcing those people/algos to improve the bid/ask in response to a spoofed one. It was not a large trade for God's sake, it's just a price quote. And the quoting entity has any right to change her mind at any millisecond. You're trying to front-run it? Well, too bad.
...Also, spoofing quotes is apparently illegal, but entering into actual trades in a particular direction hoping to generate enough momentum to then sell into is still perfectly legal and OK. To me this really sounds like just another attempt from regulators to protect sheeple from their own greed.
Yeah it was him. Pretty sure I could pick him out in a line up. Now where's my $150k a year and pension you FUCKING IDIOTS!
Notice how they are demonizing Russians in any and every way they can?