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Who Needs Regulators when you have Fair Market Champions?

Erik Hunsader, the founder of Nanex, has been a frequent watcher of the markets. His twitter feed often has screenshots of suspected spoofing and market manipulation. Reuters declares him as “an outspoken critic of high-frequency traders.”

 Yet if you follow him on twitter you will see that he isn’t really outspoken. Rather he seems to be more of a fair market champion.

 Trading Industry Compliance Structure

  • Countries have regulators to oversee their country markets.
  • Exchanges, working as Self Regulatory Organizations, oversee their market.
  • Broker dealers have compliance teams that oversee their traders, and their client traders.
  • Some buy side firms have compliance staff to support their traders.
 

 

 

 

And all this looks good. The overlapping controls and oversight looks strong.

But is it enough in a new of global markets and every increasing trading software and hardware?

A New Crowd Sourcing Model Starting?

The US CFTC has dramatically increased its Whistleblower awareness. For the past couple of years they have been very visible at the Future Industry Association’s annual expo. They recently launched a new website to allow the public to apply of monetary rewards (see  CFTC Launches Whistleblower Program’s Website).

It is obvious that Erik Hunsader has taken advantage of a similar program with the SEC. (see Reuters  U.S. SEC to pay high-frequency trading critic whistleblower award.)

With a the growth of increased technology for the public, including software like Nanex, and CQG, and others, are we now approaching a world in which the “Crowd” can now be active in the compliance world?  Can all those compliance managers who have been let go from the ever decreasing number of FCMs now have a home based side business where they become professional whistleblowers and market surveillance teams from the  “crowd”?

It makes you think, doesn’t it?

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Comments: (4)

Tayloe Draughon
Tayloe Draughon - CloudQuant - Chicago 02 March, 2016, 16:26Be the first to give this comment the thumbs up 0 likes

My appologies to Eric. The correct spelling of his name is Erik Hunsader.

Tayloe Draughon
Tayloe Draughon - CloudQuant - Chicago 02 March, 2016, 17:12Be the first to give this comment the thumbs up 0 likes

Rats.. did it again... It is Eric not Erik.....

 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 March, 2016, 11:08Be the first to give this comment the thumbs up 0 likes

Good question although I'm sure you mean it in jest - after all, without regulators, who will sift through tips from FMCs? So far I've been under the impression that only "insiders" qualified to be whistle-blowers. Thanks to your post, I went over to the CFTC website and learned that anyone can submit tips - or TCRs as CFTC calls them. Thanks!

Bolstered by this new-found piece of knowledge, I submitted my own "TCR" to CFTC. Since it didn't exactly match the type of typical TCRs that are meant to be submitted via its website, I used Twitter! 

https://twitter.com/s_ketharaman/status/705346348925784064

Tayloe Draughon
Tayloe Draughon - CloudQuant - Chicago 03 March, 2016, 14:52Be the first to give this comment the thumbs up 0 likes

Of course we need regulators.

I really like the idea of people "who see something saying something." In our investment industry that there is always someone who is trying to cheat. Yet our industry works best when we have fair and orderly markets.

Tayloe Draughon

Tayloe Draughon

Senior Product Manager

CloudQuant

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