How can the SEC tell if youre 'spoofing'

[bone]

Well when markets went electronic it leveled moret the playing field for the retail trader but it also opened the doors wide open for spoofing in massive ways and not just the little games of it that were played before it became known as spoofing. It still was spoofing but on a much smaller scale.

And this is why I tell people that ‘market footprint’ and other kinds of DOM analytics are worse than worthless - they’re quite misleading IMO. Big Commercials have very sophisticated Iceberg Order tools to hide their tracks. And the gamesmanship by spec traders is rampant - spoofing, order crossing, flipping, quote stuffing... it’s a long list.

 

[Robert Morse]

Bob, I take your point - I was referring more about the regulated futures market (specifically the CME) as that is where the lions share of these CFTC compliance actions for spoofing are being referred from.

Understood. As registered broker dealers we are responsible for monitoring for spoofing and layering for our equity accounts.

 

[sprstpd]

It doesn’t really matter what you or I personally believe - what mattered was what the CFTC and the SEC told legislators in 2010 in response to the flash crash. Why do you think something so esoteric as “spoofing” made it into Dodd-Frank?

And please tell me who the “designated market makers” are for ES and SPY. DMM’s are in smaller, thinly traded illiquid names. Exchanges don’t hand out subsidies and freebies for their most heavily traded benchmarks.

I am pretty sure that it was determined that spoofing was not the cause of the flash crash.

 

[qlai]

And this is why I tell people that ‘market footprint’ and other kinds of DOM analytics are worse than worthless - they’re quite misleading IMO. Big Commercials have very sophisticated Iceberg Order tools to hide their tracks. And the gamesmanship by spec traders is rampant - spoofing, order crossing, flipping, quote stuffing... it’s a long list.

I don't think they are useless, but like everything in trading, it needs to be viewed in context. No matter what tools/tricks they may have, contracts need to be either bought or sold ... Or else these short term speculators won't make any money. Sometimes they have the luxury to play games and be patient and sometimes they don't. But I understand that for your style of trading it may have no relevance whatsoever.

 

[bone]

I don't think they are useless, but like everything in trading, it needs to be viewed in context. No matter what tools/tricks they may have, contracts need to be either bought or sold ... Or else these short term speculators won't make any money. Sometimes they have the luxury to play games and be patient and sometimes they don't. But I understand that for your style of trading it may have no relevance whatsoever.

Here’s the thing - each futures order, whether filled or not, has its own unique exchange identifier TAG. And no one outside of a handful of internal exchange compliance persons are allowed access to that information. There is no way that a third party tool could accurately sort out and identify the classification (large spec, proprietary, retail, commercial, etc.) and intent of orders. Given how much order crossing there is in the markets I have my personal doubts if a third party tool could accurately determine who is taking and who is making liquidity at least in the futures.

 

[wrbtrader]

...In any case, how can they prove youre spoofing? You could just say you chnaged your mind? Repetitive?...

Use Google to read the past recent cases about traders being caught, fined or convicted. Many of those cases its specifically discussed how those traders were caught and you'll better understand spoofing.

wrbtrader

 

[qlai]

There is no way that a third party tool could accurately sort out and identify the classification (large spec, proprietary, retail, commercial, etc.) and intent of orders.

I agree with you. I don't think these tools are good for detecting what large players are doing (in order to join them or front run them). I do think they are useful for detecting what short term gamers (noise makers, including algos) are doing.

 

[bone]

I do think they are useful for detecting what short term gamers (noise makers, including algos) are doing.

No better than time & sales. Hell a tick chart can differentiate between chop and liquidity taking for that matter. But yes the ‘heat maps’ are pretty.

Market Profile is very good but it requires a fair level of competence on the part of the user.

 

[volpri]

Here’s the thing - each futures order, whether filled or not, has its own unique exchange identifier TAG. And no one outside of a handful of internal exchange compliance persons are allowed access to that information. There is no way that a third party tool could accurately sort out and identify the classification (large spec, proprietary, retail, commercial, etc.) and intent of orders. Given how much order crossing there is in the markets I have my personal doubts if a third party tool could accurately determine who is taking and who is making liquidity at least in the futures.

In other words cutting to the chase we are being royally screwed by venders that claim to have produced software to analyze the orders for pressures in the markets? Can’t be done is that part and parcel with what you are saying?

 

[volpri]

And this is why I tell people that ‘market footprint’ and other kinds of DOM analytics are worse than worthless - they’re quite misleading IMO. Big Commercials have very sophisticated Iceberg Order tools to hide their tracks. And the gamesmanship by spec traders is rampant - spoofing, order crossing, flipping, quote stuffing... it’s a long list.

Ok regardless of spoofing The DOM...iceberg hidden orders..etc..in the end doesn’t the little chart in front of my eyeballs tell the truth? And show the footprints? Or is it being spoofed too?