Navinder Singh Sarao, the British trader accused by US prosecutors of contributing to the 2010 flash crash, wasn’t just a found of living a parsimonious lifestyle. His alleged penchant for a technique called “spoofing” the markets has been brought to light in a string of emails contained in a new US grand jury indictment filed against him in Chicago yesterday.
Spoofers use disruptive algorithms to feign interest in trading financial products, creating an illusion of exchange pessimism in the futures market. “If I am short I want to spoof it [ie the market] down, so I will place join offer orders,” Sarao wrote in a February 2009 email to a programmer he’d asked to build trading software. “I want to put these join offer orders in the system much like a normal order but they are only seen when the market bid is taken out, or when the market goes offered.”
Interestingly, the emails suggest that Sarao didn’t see spoofing as anything at all usual. Having received regulatory guidance about the legality of his trades, he joked in a May 2013 email: “Lol, guarantee if I switch on my computer I’ll see the same people breaking all those rules, day in, day out.”
Sarao, did however, fret about whether his spoofs were working or not. He wrote in February 2009: “I need to know whether you can do what I need, because at the moment I’m getting hit on my spoofs all the time and it’s costing me a lot of money.”
Another round of redundancies could be the death knell for anyone who remembers what finance was like before 2007.
You want to work in finance. Should you be learning how to code?
Lloyds Libor trader sues (Bloomberg)
Andrew Reed, a former Lloyds trader, sued the bank for unfair dismissal after he was fired in the wake of the company’s fines for Libor manipulation.
Pay packets tracked by salary benchmarking site Emolument.com have moved upwards over the last three years.
Is Pimco falling fast? (CNN)
Once the world's largest and most influential bond fund, Pimco continues to fall from that stature.
New hedge next year (Reuters)
Former BlueBay fund managers Neil Phillips and Jonathan Fayman are preparing to launch a global hedge fund in early 2015.
FCA approves Bloomberg as regulated trading venue (Money Market)
The Financial Conduct Authority has granted Bloomberg a licence to run a so-called “multilateral trading facility” in the UK.
Daiwa hires Hibbard (Reuters)
Daiwa Capital Markets has hired Gary Hibbard as an executive director in its fixed income trading division.
Ex-Deutsche trader joins high-speed market maker (Financial Times)
Zar Amrolia, Deutsche Bank’s former co-head of fixed-income, currencies and commodities has formally left the bank and is set to join high frequency market maker XTX Markets.
London on the line (Bloomberg)
London’s position as a global financial center could be harmed if the UK left the European Union, according to Commerzbank.
Quote of the day
“You’re not going to be able to do this job well if you’re not mad about cars. You can’t treat it as a job...You have to treat the car like it was your own.” The ‘uber-valet’, who charges thousands to clean the world’s most expensive cars.