The Gateway to Algorithmic and Automated Trading

The difficulty of identifying multi-broker spoofing

Published in Automated Trader Magazine Issue 42 Q1 2017

Trading through multiple brokers has been used by spoofers to help avoid detection. New regulations for cash equity markets in the EU and US are designed to curtail the practice.

Michael Friedman

AUTHOR'S BIO

Michael Friedman is General Counsel and Chief Compliance Officer at Trillium, a proprietary trading and technology firm based in New York. Michael is also the lead designer of Trillium's trade surveillance platform Surveyor. Prior to joining Trillium, he was a securities litigation partner at a large multinational law firm.

Two New Jersey day traders were charged with spoofing and layering in parallel civil and criminal actions brought in federal court in Newark in December. The complaints identify three sample trading patterns. The symbols traded are not named, but enough detail is provided to enable us to back out what the symbols were. Figures 01-03 show what the patterns look like.

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