Infinium Capital Management Faces Civil Charges for Algorithmic Oil Trading Mayhem

[heech]

I admit it, stuff like this keeps me up at nights.

http://wallstreetandtech.com/asset-management/showArticle.jhtml?articleID=227001067&pgno=1

NEW YORK - A big high-frequency trading firm faces possible civil charges by regulators after its computer ran amok and sparked a frenzied $1 surge in oil prices in February, according to documents obtained by Reuters and sources familiar with the continuing investigation.

IT solutions that support tightly integrated, end-to-end business processes

Delivering Superior Customer Value in Insurance Infinium Capital Management confirmed only that it is the company at the center of a six-month probe by CME Group Inc into why its brand new trading program malfunctioned and racked up a million-dollar loss in about a second, just before markets closed on Feb. 3.
...
The firm's buying frenzy also reveals how faulty computer codes, known as algorithms, can spark sharp volatility and send electronic markets spinning all in the blink of an eye.

 

[rwk]

Infinium's Whitman told Reuters the firm immediately alerted the exchange to the problem. "The parties associated with this error are no longer with the firm," he said, adding the firm since adjusted its software "to ensure this error would not be repeated."

This statement from the article is obviously untrue. The party most associated with the error is Infinium CEO and co-founder Charles Whitman. It's a blatant cover-up that engineers and developers quit or were fired. Infinium had inadequate controls in place, and that is always management's fault.

 

[propseeker]

Quote from rwk:

...Infinium had inadequate controls in place, and that is always management's fault.

agreed.

it's amazing, the size of the shop, without a basic trade frequency check.

 

[ScoobyStoo]

Quote from propseeker:

agreed.

it's amazing, the size of the shop, without a basic trade frequency check.

Putting in a trap to detect sustained abnormally high freq order generation (which is indicative of an app locked in a loop) is really reeeeeeeally basic stuff.

I am staggered...