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ing is defined as "the illegal practice of bidding or
offering with intent to cancel before execution."
Spoofing can be used with layering algorithms and
front-running, activities which are also illegal. In a nut
shell, (from Austin Powers, “Hey Look, I’m in a nut-
shell!) spoofers bid or offer with intent to cancel be-
fore the orders are filled and by doing this they can
improve entry and exit prices by manipulating orders
and thus profiting from the price movement.
In July 2013 the US Commodity Futures Trading Com-
mission and Britain's Financial Conduct Authority
brought a milestone case against spoofing and indict-
ed Panther Energy Trading and Michael Coscia, a
high-frequency trader for using a "computer algorithm
that was designed to unlawfully place and quickly
cancel orders in exchange-traded futures contracts."
They placed a "relatively small order to
sell futures that they did want to execute,
which they quickly followed with several
large buy orders at successively higher
prices that they intended to cancel. By
placing the large buy orders, Coscia and
Panther sought to give the market the
impression that there was significant
buying interest, which suggested that
prices would soon rise, raising the likeli-
hood that other market participants
would buy from the small order Coscia
and Panther were then offering to sell."
(continued on Page 2)
SPOOFING LEADS TO JAIL T IME
Difficult week in the market last week as EQS held a 4.19% loss in WTI, and a 1.56% loss in Natural Gas. Range bound markets pre-sent extra challenges prior to up or downside break-out which makes it even more important to have a disci-plined strategy and stop loss program to curb larger than necessary losses.
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