Illegal To Outsmart A Trading Robot, Expert Says

Lecturer Hugo Matre at the  University of Bergen in Norway, who is an expert on exchange and securities laws, believes the two Norwegian day traders that outsmarted the Timber Hill trading robot, probably will be convicted for violation of the prohibition against price manipulation.

“The most important in a practical context here, is that the prohibition of market manipulation includes actual transactions,and  if these are likely to influence the market.”

Hugo Matre


“The general rule is that it is illegal to act in a manner that gives false or misleading signals about supply and demand in the market. The ban includes both manipulative transactions and orders, as well as dissemination of false and misleading information,” the law expert says.

One of the accused, Svend Egil Larsen, makes the following comment:

“I have not entered any orders into any order book – only made trades on the prices that was set by the robot. You can not say that I have given false or misleading signals to the market. In any case its the robot itself that gives a false picture of supply and demand in the market by moving the price when you buy only 100 shares, even though it offers several thousand,” the day trader Svend Egil Larsen (38) replies to DN.no.

Who’s Fooling Who?

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“The most important in a practical context here, is that the prohibition of market manipulation includes actual transactions,and  if these are likely to influence the market in a way that’s covered by the ban,” Matre explains.

Some market participants have argued that what the two defendants have done, is nothing more than what the trading robots does:

“The defendant have fooled one single robot, while all the other robots are trying to fool every other market participant,” one says.

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Related by the Econotwist:

Update: Day Traders Crack The Timber Hill Trading System

Oslo Stock Exchange Comments On Market Manipulation

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