Peter, hier is de moderne manier om kleine spelers het geld uit de zakken te kloppen.
1. Pinging and Spoofing
Pinging and spoofing are two new methods of market manipulation that leverage the new financial technologies of the marketplace to distort the ordinary price discovery process in financial markets.
With pinging, a larger number of small orders for a particular financial instrument are submitted and cancelled in fractions of a second by computerized platforms to induce others in the marketplace to react to their “pings” and disclose their trading intentions to the pinging party. 187 Pinging allows the initiating party to discern valuable information at little to no risk since most of the pinging orders are cancelled prior to execution. 188 For instance, Honest Abbie wants to buy 100,000 shares of Acme at any price up to $50 per share. Dishonest John, using the pinging strategy, sends out numerous small orders to sell Acme shares at various prices with no intention of honoring them. Honest Abbie reacts to Dishonest John’s orders and reveals her preferred volume and price points. Rather than being able to fulfill her large order at various price points, Honest Abbie will likely end up paying $50 or more per share for her entire order since she has unwittingly revealed her preferences to her devious pinging counterparty. When pinging is done on a large scale, over a sustained period, it can cost investors and the marketplace significant sums of capital. 189
With spoofing, orders are placed by computerized platforms for a financial instrument at prices outside the current bona fide limits to spook other market participants to react in a manner favorable to the spoofing party. 190 Spoofing allows the initiating party to distort the ordinary price discovery in the marketplace by placing orders with no intention of ever executing them and merely for the purpose of manipulating honest participants in the marketplace. 191 For instance, if shares of Citigroup are trading between $59.98 and $60.05 per share, a spoofing party will submit and cancel multiple limit orders to sell 100,000 shares at $59.90 to trick others in the market into off-loading their positions before the stock drops. In 2010, FINRA sanctioned Trillium Brokerage Services with $1 million in fines for engaging in illicit spoofing via their high frequency trading programs. 192 As noted earlier, part of the charges against Navinder Sarao alleged that he used spoofing to manipulate the market tied to S&P 500 futures and contributed to the Flash Crash. 193
Both pinging and spoofing are made possible by the evolution of market operations from a manual enterprise to a computerized enterprise. 194 The rise of autonomous, high-speed supercomputers running on smart algorithms made both methods of market manipulation possible and profitable since both pinging and spoofing require the rapid submission and cancellation of voluminous orders measured in seconds. 195 Human traders and brokers who gather and execute trades in time increments measured in minutes and hours are simply too slow to execute these schemes in a profitable manner, given the voluminous order books. 196 High-frequency and algorithmic trading platforms can execute these schemes to gain fractions of a penny per trade to the tune of billions of dollars in profits by taking advantage of unsuspecting investors with slower execution speeds and other computerized traders with unsuspecting execution codes. 197
There has been much recent debate and discussion among scholars and regulators about tactics like pinging and spoofing in connection with the rise of high-frequency trading and algorithmic systems in financial markets. 198 Policymakers and regulators have taken many important early steps to better understand and govern new manipulative tactics like pinging and spoofing. 199 In fact, the passage of the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) expressly prohibited various disruptive and manipulative practices like spoofing in financial markets. 200 The efficacy of these preliminary actions on pinging and spoofing remains to be seen as unscrupulous market players continue to find new ways to manipulate the marketplace.