Attempts to ban disruptive trading are cautiously welcomed by traders using high-frequency order placement technology
A court case has underlined the
seriousness with which disruptive trading strategies are taken
by authorities. On 2 October 2014, Michael Coscia, the owner of
Panther Trading, was charged by a US federal grand jury with
six counts of fraud and six counts of spoofing the market, the
latter having been made an offence under the Dodd-Frank Act of
Spoofing is one of several activities that
high-frequency trading firms (HFT) can engage in that are
flagged by other market participants and authorities as
disruptive. What makes these specific to HFT is the need to
post and cancel huge volumes of orders in microseconds, a
capacity that only exists where the technology infrastructure,
such as low-latency connectivity and high-speed algorithmic
decision-making, has been put in place. While high levels of
cancellations can be said to be necessary in order to only hit
the right price, while avoiding incremental price movements,
where there is no intent to fill them, they can be considered
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