Matt Levine, Columnist

Spoofing, Bonuses and a Pile of Gold

Also useless skills, and people with whom it would be unpleasant to discuss market structure.

April 24, 2015 at 12:06 PM UTC

Matt Levine is a Bloomberg Opinion columnist. A former investment banker at Goldman Sachs, he was a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz; a clerk for the U.S. Court of Appeals for the 3rd Circuit; and an editor of Dealbreaker.

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The Sarao saga continues.

We're getting a fuller picture of alleged flash-crash spoofer Navinder Singh Sarao, and from what I've read he seems like a recognizable type. Specifically, he's the sort of day-trader who whines a lot about how markets are rigged against him and how he'd be making so much more money if it weren't for those evil high-frequency traders. "I don’t like the HFT arena and have complained to the exchange numerous times about their manipulative practices, please BAN IT," he told the U.K. Financial Conduct Authority last year, though he also told the FCA that his own trading was pretty fast because "I have always been good with reflexes and doing things quick." His correspondence with regulators is all in all pretty nutty -- "I am a trader who changes his mind very very quickly, one second I am prepared to buy the limit of 2,000, the next second I may change my mind and get out" -- but I have to say that I kind of believe that he believed it. He describes some of the modifications that he asked to be made to his trading software, which U.S. authorities have depicted as being spoofing-oriented, but which he saw as a way to "help try and hide my orders from these people," i.e., the high-frequency traders who he thought were front-running him. The line between lying about your trading intent (spoofing) and disguising it (avoiding HFT) can be fuzzy.