[adriancr]

Ideally the less manipulation you have the better working market. So, it's good that spoofing is illegal.

Their only purpose here was to: "Through these spoof orders, the traders intentionally sent false signals of supply or demand designed to deceive market participants into executing against other orders they wanted filled. "

That being said, algos could have hit the large spoof bid, but imagine if it was legitimate, that would mean price movement against them and leaving them holding bags.

[hornokpleas]

> Ideally the less manipulation you have the better working market. So, it's good that spoofing is illegal.

I think this is debatable. There's an ideal where no one spoofs and market prices are accurate at all times. But it's very difficult to enforce perfectly - there is no bright line test for whether you wanted a trade to execute or not, when you placed it. So in practice you are just always partially enforcing it and keeping the manipulation not too obvious.

The other possible solution is that anyone can place any order of any type any time they like, for any reason. The constraint is that if you place an order and it trades, you have to honour it. This leads to a situation where no one can trust the order book, but traded prices do reflect market truth - because of course no one wants to trade at an inaccurate price (not in their favour). The plus side is that it's much easier to make the system work. You don't have to run an arms race with people using sophisticated manipulation which can't yet be detected or prevented.

It's not clear whether order books giving (somewhat) accurate information is worth both the direct costs of enforcement and the potential unfairness of some spoofing rules being enforced and some not. It might be - but it's not clear that it definitely is.

[MrMan]

I viewed the order book not as an oracle of the "real" price but as a multi-armed bandit which would spit out fills in a semi-stochastic fashion. my goal was to get the best fills, not to find the correct price. the best heuristic I found was a weighted liquidity provisioning scheme where I always entered one passive order and then followed up with an aggressive order after a certain period of time. you want to get in the queue so entering the passive order early is an advantage on some order books.

entering passive orders wasn't spoofing, but I was constantly cancelling orders. the difference between me and someone malicious was probably the frequency of my orders and how far from the midpoint they were - not vey frequent, and not very far. so its not a bright line.

[usefulcat]

> That being said, algos could have hit the large spoof bid

I would guess that they sent a bunch of orders and them immediately cancelled them. If that's what they did, then by the time other market participants see those orders (remember network latency), the orders will already have been cancelled, in which case it would be literally impossible to trade against those orders after having seen them in the market data.

[dudeinjapan]

If this is the case, the real culprit is the exchange. Rather than offering premium "flash" facilitating services like colocation for HFT traders, the exchange could do something like 20-second auctions during which time orders can't be cancelled until the next auction interval.