CME fines HFT firm $850k for algo and computer malfunctions

CME fines HFT firm $850k for algo and computer malfunctions

CME Group has fined high-frequency trading firm Infinium Capital Management a total of $850,000 for three separate computer malfunctions.

According to the Financial Times, the firm's trading programs twice went haywire in October 2009, causing uncontrolled selling of e-mini contracts on the CME.

The CME says that by "allowing a malfunctioning [automated trading system] to operate in a live trading environment, Infinium committed an act detrimental to the welfare of the exchange".

The exchange operator has fined Infinium $500,000 for the two incidents.

A third malfunction in February 2010 saw Infinium use an algorithm in the open market that had been created the previous night with very little back-testing, says the FT.

The algo went haywire, buying oil futures in rapid succession on the New York Mercantile Exchange, causing a $1 surge in prices. The company has been fined $350,000 for the offence.

Infinium fined $850,000 for computer malfunctions - FT (subscription)

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