Sunday, June 24, 2012

High-Frequency Traders Under U.S. Investigation For 'Wash Trading'

According to the report in HuffPo Regulators are reportedly looking into whether high-frequency traders engaged in an illegal practice known as wash trading.

U.S. regulators are reportedly probing whether high-frequency trading firms have been conducting transactions with themselves in a potentially illegal practice known as "wash trading" that may distort market prices.

The Securities and Exchange Commission and the Commodity Futures Trading Commission are looking into whether high-frequency traders have been buying and selling contracts to themselves, according to Bloomberg, which cited two people with knowledge of the matter. Wash trading is a particular risk for high-frequency traders, which use computer algorithms to quickly trade stocks, bonds and derivatives contracts, because these firms often have multiple trading algorithms working at once….

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