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Not Just Stocks … High Frequency Traders Might Be Manipulating Futures, Options, Bonds, Currency and Commodities Markets As Well

Posted By admin On October 29, 2010 @ 4:07 am In Money Watch | Comments Disabled

Washington’s Blog
Oct 29, 2010 

As I noted [1] earlier today, high frequency traders trade not only stocks, but also futures, options, bonds and currency:

Not Just Stocks ... High Frequency Traders Might Be Manipulating Futures, Options, Bonds, Currency and Commodities Markets As Well CHart 35 2 [2]

We know that high frequency trading is used to manipulate the stock market. The prevalence of high frequency trading in other markets means that it might be used to manipulate those markets – perhaps virtually all markets – as well.

Indeed, by manipulating futures prices, it is possible to manipulate the current price of the underlying asset.

As the New York Times reported [3] in September 2009:

It could well be that Optiver’s cowboy trading tactics [manipulating the price of oil through high frequency trading] are unique to the company. But as concern grows over the effect that high-octane computerized trading is having on markets worldwide, Optiver’s conduct in the oil futures market raises questions as to whether the relentless competition of this business is forcing companies to engage in similar practices. “These are proprietary trading shops that are masquerading as market makers,” said Tim Quast of Modern IR, a consulting firm that advises corporations on market structure issues.The Securities and Exchange Commission has opened up an investigation into high-speed-trading practices, in particular the ability of some of the most powerful computers to jump to the head of the trading queue and — in a fraction of a millisecond — capture the evanescent trading spread before the rest of the market does.

Having A Supply Of Healthy Foods That Last Just Makes Sense (AD) [4]

Not Just Stocks ... High Frequency Traders Might Be Manipulating Futures, Options, Bonds, Currency and Commodities Markets As Well 260310banner2 [5]


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URLs in this post:

[1] noted: http://www.washingtonsblog.com/2010/10/yes-70-of-us-equity-trades-are-high.html

[2] Image: http://i.cmpnet.com/financetech/art/_a/10_2009/CHart-35-2.jpg

[3] reported: http://www.cnbc.com/id/32690802/Secrets_of_Alleged_Oil_Price_Manipulation_Exposed

[4] Having A Supply Of Healthy Foods That Last Just Makes Sense (AD): http://www.efoodsdirect.com//index.html?aid=14&adid=43

[5] Image: http://purewaterfreedom.com/

[6] 84% of All Stock Trades Are By High-Frequency Computers … Only 16% Are Done By Human Traders: http://www.prisonplanet.com/84-of-all-stock-trades-are-by-high-frequency-computers-%e2%80%a6-only-16-are-done-by-human-traders.html

[7] Traders manipulated oil prices – U.S.: http://www.prisonplanet.com/traders-manipulated-oil-prices-us.html

[8] Corporate Media Spotlights Distortion of Market by High Frequency Trading: http://www.prisonplanet.com/corporate-media-spotlights-distortion-of-market-by-high-frequency-trading.html

[9] JPMorgan, HSBC Accused of Manipulating Silver Futures: http://www.prisonplanet.com/jpmorgan-hsbc-accused-of-manipulating-silver-futures.html

[10] Futures Down, Markets Tank Around The World, Euro Ready To Break $1.21: http://www.prisonplanet.com/futures-down-markets-tank-around-the-world-euro-ready-to-break-1-21.html

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