22 August 2017
visit www.avoka.com

FBI investigates high-speed trading

01 April 2014  |  5232 views  |  1 stock quotes

The Federal Bureau of Investigation is investigating whether high-speed traders are breaking the law by acting on non-public information ahead of the wider markets.

News of the probe comes just days after Michael Lewis caused a stir on CNBC's 60 Minutes programme when he accused high frequency traders of front-running the markets during an interview to promote his new book 'Flash Boys'.

The FBI's actions also follow hard on the heels of an aggressive campaign by New York attorney general Eric Schneiderman, who has called for tough regulations to tackle practices such as co-location, which he claims give high-frequency traders unfair advantages and distort the market.

Schneiderman - who has been investigating HFT practices as part of an 'insider trading 2.0' campaign - has homed in on services offered by trading venues that benefit HFT firms at the expense of other market participants.

The FBIs' investigation, called the High-Speed Trading Initiative, is still in its primary stages, a senior FBI official and an agency spokesman told the Wall Street Journal.

The Fed's interests are likely to centre around the legal implications associated with insider trading rules.

Commenting on the probe, Dr Roman Kozhan, Associate Professor of Finance at Warwick Business School point out that insider trading is an old issue which existed long before the introduction of high-frequency and algorithmic trading.

"Regardless of whether the trader manually entering orders based on illegal information or using a sophisticated computer-based algorithm, the implications are the same; in both cases the traders will be subject to insider trading regulations," he says. "So I do not think this is anything much to do with high-frequency trading per se."

Comments: (1)

Neil Crammond
Neil Crammond - trader - london | 01 April, 2014, 11:50

front running is illegal ............ perhaps ask exchanges if they allow certain members to flaunt the rules daily ?

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

New York attorney general sets sights on co-location

New York attorney general sets sights on co-location

18 March 2014  |  6062 views  |  1 comments | 3 tweets | 6 linkedin
Business Wire stops selling direct feeds to HFT firms

Business Wire stops selling direct feeds to HFT firms

21 February 2014  |  4943 views  |  0 comments | 3 tweets | 5 linkedin
BlackRock to shut down analyst survey programme following Attorney General probe

BlackRock to shut down analyst survey programme following Attorney General probe

10 January 2014  |  4126 views  |  0 comments | 2 tweets | 1 linkedin
HFT improves market fairness - research

HFT improves market fairness - research

09 December 2013  |  4002 views  |  0 comments | 3 tweets | 3 linkedin
HFT makes markets more efficient - ECB paper

HFT makes markets more efficient - ECB paper

06 November 2013  |  6287 views  |  0 comments | 5 tweets | 7 linkedin
New York attorney general goes after HFT cheats

New York attorney general goes after HFT cheats

25 September 2013  |  7100 views  |  1 comments | 2 tweets | 1 linkedin
Regulators begin HFT crack down on market spoofing algorithms

Regulators begin HFT crack down on market spoofing algorithms

22 July 2013  |  10641 views  |  1 comments | 3 tweets | 1 linkedin
Thomson Reuters suspends early peeks at consumer data for HFT clients

Thomson Reuters suspends early peeks at consumer data for HFT clients

09 July 2013  |  5498 views  |  0 comments | 3 tweets | 1 linkedin

Related blogs

Create a blog about this story (membership required)
visit www.niceactimize.comvisit www.dorsum.euvisit www.worldpaymentsreport.com

Who is commenting?

A Finextra member Finextra Member Commented on: Real-time payments in...
A Finextra member Finextra Member Commented on: Barclays uses sensors...

Top topics

Most viewed Most shared
Mobile contactless spending accelerating in UKMobile contactless spending accelerating i...
12118 views comments | 26 tweets | 23 linkedin
Barclays pairs banking data with third party apps for SmartBusiness DashboardBarclays pairs banking data with third par...
10584 views comments | 22 tweets | 33 linkedin
hands typing furiouslyWhy Is Risk Analytics Important?
10001 views 0 | 5 tweets | 1 linkedin
RBS to bring Silicon Valley to EdinburghRBS to bring Silicon Valley to Edinburgh
9818 views comments | 10 tweets | 8 linkedin
Australia regulates digital currenciesAustralia regulates digital currencies
9713 views comments | 21 tweets | 34 linkedin

Featured job

Competitive
London, UK (or flexible)

Find your next job