‘flash crash’ trader’s appeal SALE: Tata

LAWYERS for a financial trader accused of manipulating markets and causing the 2010 “Flash Crash” in US stocks have appealed in the high court against his extradition to face trial in the United States.

Navinder Singh Sarao, 37, who worked out of his sub urban London home, allegedly made millions of dollars with software that could automatically manipulate prices.

A jury in Chicago indicted Sarao last year, accusing him of earning $40 million (£27.3m) through techniques including market “spoofing” – making fake orders – between 2010 and 2014.

The indictment detailed how the trader built a system with the help of programmers specifically designed to help him repeatedly issue and cancel simultaneous sell-and-buy orders in key securities to make the prices go in the direction he wanted.

The indictment said Sarao focused on certain securities like the E-Mini S&P futures contract on the Chicago Mercantile Exchange to move prices, especially in moments of high market volatility.

“Sarao’s large, bogus orders had a tendency to effect artificial movements in the E-Mini market price by creating a false appearance of substantial supply and demand,” it said.

Sarao’s use of the layering technique “was particularly intense in the hours leading up to the Flash Crash” of May 6, 2010, when the Dow Jones Industrial Aver- age plunged 600 points in a matter of minutes, wiping hundreds of billions of dollars from share values.

Playing E-Minis, he made and modified bogus orders thousands of times in a short period, ultimately cancelling them without ever executing any. At the same time he raked in $789,000 (£539,000) in profits on real contract trades that day. The indictment set 22 counts of wire fraud, price manipulation and spoofing against Sarao.