Thank you for posting this. Been a while since I'd seen (the 2010 ZeroHedge piece).

That's it, that is what they are blaming the flash crash on? Lots of algorithms stay N ticks off the inside counting on getting filled on a pop (often a mini stop run) that has nothing behind it and therefore quickly retraces.

Even given all the price changes (which could/would normally be high in that sort of an algo) that seems pretty thin. When you look at his executed trades, if looks like he would meet virtually any messaging limits because the limits are on messages relative to size traded. A message for a 100 lot counts as 1 message but if that 100 lot executes, that counts as 100 executions (unless there is something that has changed since I last worked with that sort of trade).

Tom your welcome, everyday I am witness to the same games and gimmicks that are allowed by the exchanges. Cftc, sec, they certainly do not do their job, in fact all they care about is how much the private sector will pay them when they leave their governmental posts.

It doesnt even take a lot of capital to do this, since there are no speculators in the market, and every algo is a reactionary algo dictated by inputs generated from the inside bid offer of every market, it makes it easily exploitable, I can do it with probably $2 million in an account, easily. And its all legal, spoofing, layering those algos have no clue, the real trader knows exactly when to push the button, an algo is simply limited by its inputs.

Scott it is a scape goat for sure, I was on that day and believe me, a whole lot more than $40 mil was made given the malfunction of the market that day, it was not one guy that's for sure. But as always people like to put a face to a crime, so they can move on...If I am Waddell and Reed there should be a massive lawsuit then no?

@Michael, I agree. It is kind of hard to fathom this type of situation; I don't see anyone involved coming out of this looking very good.

a virtual pit with tags is an easy solution BUT I very much doubt that Virtu ; Citadel or RSJ would agree as "front running " & "overtaking their game winners .

Not easy to picture an individual trader being able to fake and get out against the likes of Virtu

All you need is a thin book -- after-hours in options, for example.

$0.50 - $2.00 bid/ask spreads where there would be 15¢ spreads during regular hours.

What to do? Spoof! Put up a couple of 1-lots at various strikes, squeeze the market back to reason, and trade what you need to trade.

Been there, escaped that, can just afford the t-shirt.

Agreed happens every night in the bonds

the exchange has to provide governance and sadly relying on HFT market makers was not a good choice .. Then again i never voted for 24/7 trading hours ...Perhaps ask those who did !

open outcry was a bad and had to go ! retail customer were never filled ;very like today ; easy remedy would be to end anonimity and tag all traders - therefore applying real time regulation. cheap effective and correct .

Neil, I disagree, retail just like today has the option to buy or sell at the offer, trying to get the edge and buy on the bid and sell on the offer, never generally occurs, not even for professional traders. The floor at least had volume on every tick unlike todays market, back in the late 90's I could buy 300 bonds without even moving the market 1 tick, that is the real fallacy of HFT, it doesn't come close to that liquidity, secondly back on Project A before Globex, every trade came with a visual tag for both counterparties, i.e if I paid 5 for 50 both my tag and acronym with clearing firm number came up, so did the counterparties, instantaneously, the CME did away with that at the request of the large manipulators, I am quite sure