Regulators crack down on HFT market spoofing algos

Finextra reports that regulators have begun to crack down on HFT firms that employ algorithms to submit fake orders to manipulate the market.

Regulators on both sides of the Atlantic have levelled their first fines against high frequency traders who deployed computer algorithms to spoof the markets by placing and immediately cancelling bids and offers in futures contracts.

David Meister, the CFTC’s enforcement director, says: “While forms of algorithmic trading are of course lawful, using a computer program that is written to spoof the market is illegal and will not be tolerated. We will use the Dodd Frank anti-disruptive practices provision against schemes like this one to protect market participants and promote market integrity, particularly in the growing world of electronic trading platforms.”

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