‘Rogue trader lived in the suburbs as faster internet there gave him edge over City dealers’
SUSPECTED rogue trader Navinder Sarao lived in his parents’ modest home because it gave him a split-second advantage worth millions of pounds, it was claimed yesterday.
His family’s semi-detached house in suburban West London is closer to an internet server used by one of the major financial exchanges, giving him a nanosecond advantage over rivals in the City.
His thousands of high-frequency trades could be processed faster than those from dealers in Central London, giving him a massive commercial advantage.
Sarao, 36, was dubbed the ‘Hound of Hounslow’ after it emerged he lived at home with his parents, despite allegedly making £26.7million in just four years of dealing from their home.
He was arrested on Tuesday at the request of US authorities, who have
‘Nanoseconds are worth a fortune’
accused him of helping to trigger the Wall Street ‘Flash Crash’ of 2010, in which almost a trillion dollars was wiped from global share prices.
The former Brunel University student allegedly made £550,000 in five minutes on the day of the ‘Flash Crash’, the biggest one-day collapse in Wall Street history. He is accused of using computer programs to create ‘spoof’ transactions on the Chicago Mercantile Exchange, and faces charges which could carry a 380-year prison sentence.
He spent a third night in custody last night after failing to pay the £5million surety demanded by the courts to grant him bail.
Neil Crammond, who in 2002 helped train Sarao in his first trading job at Futex in Woking, Surrey, said he had quickly become one of its most successful traders, and that the family’s home in Hounslow was perfectly located for Sarao’s operation.
He told the Daily Mail: ‘One of the exchange servers is based at Slough. The nearer you are the faster your order travels.
‘He could overtake orders from the City, meaning he was better placed to profit on tiny fluctua- tions in the market. It’s only nanoseconds but these minuscule amounts of time are literally worth a fortune to traders. Every nanosecond counts.’
There is no suggestion of any wrongdoing by Sarao during his time at Futex, which he left in 2008.
Sarao once wrote to a trade magazine claiming he made between £30,000 and £88,000 each day, but former colleagues said the trader had scant regard for the trappings of his success, living a frugal life. However, school friends said Sarao had briefly lived a flashier lifestyle when he began making money in his mid 20s.
Aman Singh, 36, a former classmate, said: ‘He used to go to strip clubs where he would flash his cash and pay for dances.
‘I don’t think he’s ever had a girlfriend. He didn’t seem interested in meeting girls unless it was strippers in these bars.’
In a 2014 email to the UK Financial Conduct Authority, Sarao said: ‘I am a trader who changes his mind very, very quickly, one second I’m prepared to buy the limit of 2,000, the next second I may change my mind and get out.
‘This is what is unique about my trading, I trade very large but change my mind in a second.’
Sarao described himself as ‘an old school point and click trader’, saying he used his computer mouse to place each trade – which appears to contradict US allegations he used computer programs to manipulate markets.