The Hound high­lights a bro­ken sys­tem

The Week Middle East - - City -

Iain Dey

The Sun­day Times Navin­der Singh Sarao, the Houn­slow-based trader charged with caus­ing the 2010 Wall Street “flash crash”, has pleaded guilty to “spoof­ing” the mar­ket – plac­ing fake or­ders on ex­changes to trick other traders, says Iain Dey. It ap­pears that “one bloke op­er­at­ing from his bed­room with a home com­puter” re­ally did man­age “to out­ma­noeu­vre the global fi­nan­cial sys­tem”, dis­prov­ing the the­ory that su­per-fast com­put­erised trad­ing gives Wall Street firms an un­beat­able ad­van­tage. The Hound of Houn­slow’s “par­tic­u­lar brand of mar­ket ma­nip­u­la­tion” is il­le­gal in the US, but not in Bri­tain. In­deed, had he worked at a big hedge fund, his lawyers would prob­a­bly have de­scribed his dodgy trad­ing strat­egy as his “edge”. The de­ba­cle high­lights “a bro­ken sys­tem”. Huge fake bets should be de­tected and blocked be­fore they can do dam­age; yet pro­fes­sional in­vestors piled in be­hind Sarao, caus­ing a gi­ant crash. “Spoof­ing the mar­kets should be im­pos­si­ble, rather than il­le­gal.” If the Hound had been prowl­ing the mar­kets af­ter last week’s elec­tion, rather than “shack­led in an or­ange jump­suit”, I reckon he would have led “the robo-traders on a merry dance”.

Ross, 78, a “softly spo­ken” pri­vate eq­uity in­vestor, is “an old Wall Street hand” who spe­cialises in snap­ping up dis­tressed as­sets; he is con­sid­ered “a bit of a cow­boy” in some quar­ters. He served as an eco­nomic ad­viser through­out the cam­paign and was one of the main ar­tic­u­la­tors of Trump’s trade pol­icy. Mnuchin, 53, also “joined Team Trump early” as fi­nance chair­man, and is a long-term busi­ness as­so­ciate of Trump’s. A for­mer Gold­man Sachs part­ner, Mnuchin went on to found Dune Cap­i­tal Man­age­ment and “scored big” in the re­struc­tur­ing of IndyMac bank af­ter the 2008 cri­sis. Lat­terly, he has been fi­nanc­ing Hol­ly­wood movies. Gold­man col­leagues call him a tough, ruth­less op­er­a­tor who is not par­tic­u­larly adept at “nav­i­gat­ing re­la­tion­ships”.

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