الإثنين , يونيو 8 2020

UK arrest over US 'flash crash'

Nanex chart showing trading during the Google flash crash

A financial trader has been arrested in the UK after US authorities accused him of contributing to the 2010 Wall Street “flash crash”.

US regulators are seeking to extradite Navinder Singh Sarao, 37, who is charged with wire fraud, commodities fraud, and market manipulation.

The crash wiped billions of dollars off the value of US shares in minutes.

The US Department of Justice alleges that Mr Sarao contributed to the crash using an automated trading programme.

The US Commodity Futures Trading Commission has also filed civil charges against Mr Sarao, from Hounslow, west London, calling him a “very significant player in the market”.

The infamous flash crash saw US markets plunge rapidly, only to then rebound just as quickly. Regulators blamed high-frequency share traders placing multiple sell orders.

High-speed trading is where share dealers create computer algorithms to buy and sell stocks in milliseconds.

The Justice Department said in a statement that “Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6, 2010”.

The statement continued: “By allegedly placing multiple, simultaneous, large-volume sell orders at different price points – a technique known as “layering” – Sarao created the appearance of substantial supply in the market.”

Mr Sarao was then able to buy and sell futures contracts tied to the value of the share indexes, it is alleged.

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