The British futures trader accused by US authorities of contributing to the 2010 "flash crash" has been freed on bail by a London court.
Navinder Singh Sarao faces extradition to stand trial in Illinois on charges of wire fraud, commodities fraud, commodities manipulation, and "spoofing" in relation to the crash, which saw the S&P 500 index plummet 600 points in minutes, sending shockwaves through the global financial system.
Sarao had been held at Wandsworth prison following his arrest in April. According to Reuters, he was granted bail of just over £5 million but could not meet the terms because his assets had been frozen.
This week Westminster Magistrates' Court heard that the trader had funds of more than £30 million, including £25.5 million held in Switzerland. This news saw US authorities decide not to oppose a renewed bail application, prompting the judge to lower terms to £50,000.
Under the bail conditions, Sarao - who faces an extradition hearing in September - will face a nightly curfew, hand over his passport, agree not to move outside of the M25 motorway, and refrain from using the internet to trade.
According to the criminal complaint against him, Sarao used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts on the CME. This alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6, 2010, that came to be known as the "flash crash."
The 37 year old is accused of using a "dynamic layering" scheme, to affect the price of E-Minis, placing multiple, simultaneous, large-volume sell orders at different price points to create the appearance of substantial supply in the market.
When prices fell as a result of his activity, Sarao allegedly sold futures contracts only to buy them back at a lower price. Conversely, when the market moved back upward as activity ceased, he allegedly bought contracts only to sell them at a higher price.
The flash crash, threw a spotlight on the world of high-frequency trading and prompted regulators, led by the SEC, to bring in new measures such as circuit breakers designed to prevent huge movements of stock prices in an era of super-fast trading.