On my way home from work today, the front page on the news paper Dagens Næringsliv caught my attention. It says “Tiltalt for å ha lurt aksjerobot“, which translates to something like “Prosecuted for having fooled shares robot”.
According to the paper, the core details are:
- Two people, a day trader (Svend Egil Larsen) and a student (Peder Veiby) have both been prosecuted with stock price manipulations. According to the article they have not known each other or cooperated.
- There are around or over 2200 transactions in total, and their counterpart have been a trading bot operated by Timber Hill.
- Both traders have made a profit on their trades, performed in relatively illiquid shares, listed on the Oslo stock exchange.
- Between November 2007 and March 2008, on several occasions, ranging from 30-40 to under 200 transactions have been performed over a few minutes to a few hours (less than a day).
So what is this? Socialism on a stock exchange? Poor bot owner, who had a non-optimal sub-performing algorithm that lost them money? Or are the people at Oslo stock exchange just not getting high frequency trading, or not liking it? Or are they loving the high volume that algorithmic trading might bring them so much that they try to protect the big fishes?
This whole thing sounds a bit strange to me.. I guess you can say that the two people being prosecuted here don’t fit under the typical HFT definition. But I ask; what’s the actual difference between what they have figured out and performed manually, and what you have figured out and made an application/automated strategy perform on your behalf? And for all I know, they might have had automated routines helping them out. Unless there are some key elements left out in the article, the behavior of the Oslo stock exchange is both strange and unpredictable as far as I can tell.
I guess the moral of the story is: If your doing HFT, think again before you bring your money/liquidity to the Oslo stock exchange. That is, unless you’re loosing money, because then maybe the Norwegian authorities will fight your “case” for you.