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What happens when you bait HFT

Interesting is how they go after the weakest side and still ignore all the strategy war going on.
http://www.bloomberg.com/news/articles/2015-04-23/trader-tied-to-flash-crash-says-he-simply-changed-his-mind-a-lot

2 responses

Hi Lucas,

More discussion here:

https://www.quantopian.com/posts/trader-arrested-in-manipulation-that-contributed-to-2010-flash-crash

From http://www.cftc.gov/filings/orgrules/rule082814cmedcm001.pdf:

Text of New Rule 575 – (“Disruptive Practices Prohibited”)
All orders must be entered for the purpose of executing bona fide transactions. Additionally, all nonactionable
messages must be entered in good faith for legitimate purposes.
A. No person shall enter or cause to be entered an order with the intent, at the time of order entry, to
cancel the order before execution or to modify the order to avoid execution;
B. No Person shall enter or cause to be entered an actionable or non-actionable message or messages
with intent to mislead other market participants;
C. No Person shall enter or cause to be entered an actionable or non-actionable message or messages
with intent to overload, delay, or disrupt the systems of the Exchange or other market participants;
and
D. No person shall enter or cause to be entered an actionable or non-actionable message with intent to
disrupt, or with reckless disregard for the adverse impact on, the orderly conduct of trading or the fair
execution of transactions.
To the extent applicable, the provisions of this Rule apply to open outcry trading as well as electronic
trading activity. Further, the provisions of this Rule apply to all market states, including the pre-opening
period, the closing period and all trading sessions.

My read is that this rules out pretty much any active strategy aimed at shifting the market to ones advantage, which sounds almost un-American.

ops any mod could just delete this hehe