Two months before the CFTC and DOJ slammed one solitary trader in a London suburb with “seasonally-adjusted” allegations that it wasn’t actually Waddell and Reed who flash crashed the market on May 6, 2010 as the SEC originally claimed but an E-mini spoofer named Nav Sarao (whose only real crime was exposing the rigging by the HFT cartel), we showed in explicit detail how HFTs were rigging the Treasury market with “egregious manipulation” in the futures market through spoofing.
To regular ZH readers who have seen countless intraday examples of Treasury rigging, not to mention the power of HFT demonstrated during the October 15 flash crash, this was nothing new, but what made this particular case unique is that it was brought up in litigation by one HFT firm, HTG Capital Partners, which charged unnamed “John Does” with doing precisely what we had alleged HFTs do in all capital markets, all the time. This is what we said:
… the catalyst that cracked the Libor conspiracy was when the members started to make less and less money, until ultimately the formerly golden goose was bled dry. At that point, their incentive to keep their mouths shut became nil, and in some cases negative. From that point on, it was just a matter of time before the regulators had a case against the conspiracy granted to them on a silver platter.
The same is now happening to high frequency trading, because in a market in which volumes are crashing to unprecedented lows, and where there are no longer whale accounts for the HFTs to frontrun, pardon “provide liquidity to”, there is no longer a need for as many HFT firms. And those firms which end up on the losing end of the technological arms race, now that there is not enough profits for everyone to go around, are suddenly incentivized to bust the whole criminal ring wide open. Or in the words of Louis XIV, “After me, the flood.“
This post was published at Zero Hedge on 06/08/2015.
Follow on Twitter
Recent Comments