‘Flash traders’ investigated by FBI on methods
Apr 2, 2014 5:13:33 GMT -5
Post by popcorn on Apr 2, 2014 5:13:33 GMT -5
‘Flash traders’ investigated by FBI as book blows lid on their methods to billion-dollar profits
The FBI is investigating whether “high-frequency trading” firms are committing insider trading or fraud.
The firms, which use computer-driven algorithms to buy and sell shares in milliseconds, are being looked at over whether they are breaking the law by acting on information about other investors’ trades to plan their own deals.
Federal agents are investigating firms which receive information on forthcoming share orders moments before the orders arrive at exchanges.
The high-frequency traders (HFTs) then use the data to buy the stock before the first deal has been processed and sell it on to the original purchaser at a slightly higher price, a process known as “front-running”. They do this by exploiting the minuscule time differences that occur between different computers sending orders to buy or sell shares to stock exchanges.
HFTs – also known as “flash traders” – pay millions of dollars to ensure they have the fastest connections possible. They go as far as placing their computers inside stock exchanges and even laying hundreds of miles of high-speed fiber optic cable.
read more:
www.telegraph.co.uk/finance/markets/10738225/Flash-traders-investigated-by-FBI-as-book-blows-lid-on-their-methods-to-billion-dollar-profits.html
The FBI is investigating whether “high-frequency trading” firms are committing insider trading or fraud.
The firms, which use computer-driven algorithms to buy and sell shares in milliseconds, are being looked at over whether they are breaking the law by acting on information about other investors’ trades to plan their own deals.
Federal agents are investigating firms which receive information on forthcoming share orders moments before the orders arrive at exchanges.
The high-frequency traders (HFTs) then use the data to buy the stock before the first deal has been processed and sell it on to the original purchaser at a slightly higher price, a process known as “front-running”. They do this by exploiting the minuscule time differences that occur between different computers sending orders to buy or sell shares to stock exchanges.
HFTs – also known as “flash traders” – pay millions of dollars to ensure they have the fastest connections possible. They go as far as placing their computers inside stock exchanges and even laying hundreds of miles of high-speed fiber optic cable.
read more:
www.telegraph.co.uk/finance/markets/10738225/Flash-traders-investigated-by-FBI-as-book-blows-lid-on-their-methods-to-billion-dollar-profits.html