The following is a 6 minute excerpt from a recent interview of Vincent Lanci (VBL) as conducted by the lovely and talented Tom Carrigan of the TPC podcast. Transcription tabbed and at bottom.
Full interview video here…
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More on Spoofing:
Listen to this 2 minute clip by Chris Marcus we re-discovered from years ago in which he also describes spoofing very accurately.
PODCAST TRANSCRIPTION. (See tab for follow along)
What did the bankers get convicted of?
They got convicted of front-running their client orders.
They got convicted of manipulating the market.
They got convicted of, let's just say, cheating.
And the thing that was easiest to prove was something called spoofing.
And no one really tells you what spoofing is.
And I'm here to do that now, to give it to you officially, because I was asked behind the scenes on one of the civil cases
To explain what spoofing was as part of the forensic work, and I did that So spoofing is what everyone talks about should we start there?
Yeah, okay?
All right one of the highlights or one of the big news media things was one of there's two traitors right right and the reason is by the way This is a huge huge case and not not just because of the money or the dollar amount because over the years
They've been able to isolate it to a rogue trader, a bad guy, a bad apple.
Well, this is a managing director and executive director.
So we're going up the ladder.
We're showing that there is a possible cultural issue in the industry.
And in fact, they were trying to press Rico, but they dropped that mysteriously.
But anyway, these two guys are high up.
They're not like low level desk, you know, idiots.
They've been around, right?
Okay, so spoofing.
Spoofing is, the terminology you're gonna use, spoofing is placing orders not intending to execute them.
So they say, I'm gonna buy it, and they don't.
They say, I'm gonna sell it, and they don't.
Now, that's what you're gonna get out of this if you read this a million times.
I'm gonna tell you what spoofing is in English, having had it done to me, and actually I never spoofed.
It was done to me constantly.
All right, so spoofing is,
Forget the markets for a second.
This is going to make it a lot clearer.
Spoofing is you and I are playing poker, right?
And it's bluffing, but then doing take backsies.
So you and I are playing poker.
I have a bigger wallet than you.
I have more chips in front of me, right?
And you're, you know, you put in $5,000 and I put in and I see you in 5,000 and raise you 25,000.
You go to your pile to call me.
So you're going to throw your chips in too?
I change my mind and take my chips back.
You can't do that.
Once the chips are in the pile, you're in.
Okay.
So in the marketplace, in the electronic marketplace, the pile is the screen.
So once you put your bid there,
You can't do take backsies, right?
It's a stupid phrase, but I'm using it, right?
No, no, no, it's what it is.
But that's what they did.
And so what no one, no one, I mean, fucking A man, no one will describe why they can do that, let alone why they can do that or how they can do that.
And we can't.
Why can't we do it if they can do it?
Which is another question you're probably going to ask me down the road.
But that's basically it.
The reason that's the key sensational part of it is because there's a phrase in some of the stories where one of the traders, he used the mouse so much they put ice cubes next to him to cool his hands off because he was so hot on the mouse.
And that's pretty funny, you know?
That's pretty funny.
And I can see them doing that on the desk.
Meaning he was...
You know, he was putting a bid in and cancelling it.
Putting a bid in and cancelling it.
And so they were putting the ice there because he was working the mouth so fast.
The thing is, and we were talking about this off the air before, the thing is any normal right-minded libertarian will say, so what?
You can do the same thing.
But we can't.
You see, they can put their bids in and pull them faster than you.
And I don't mean faster with the mouse.
And I don't mean faster because they just have more bandwidth or better connection.
I mean faster because the wiring of the exchange
What is Spoofing?
But if I go six in that bid for a million contracts, and for some reason you had a million contracts to sell, if you hit that bid, it wouldn't be there.
I'd already taken my money back out of the pocket.
When you trade with a spoofed market, you're trading with a ghost.
It's an image.
It's not an order.
The image lasts longer than the order.
Does that make sense?
Yes.
Okay.
So that's the first step, right?
So I bid six and a half, you panic, you buy sevens, right?
I bid six and a half again, you panic, you buy seven and a halves, right?
And then it trades seven and a half and guess who's selling them to you?
Me.
So I create a panic for that micro minute.
Right?
Yeah.
Look, everyone's going to buy red Corvettes.
And look, I just happen to have some red Corvettes for you.
Yeah.
Same.
It's as old as time itself.
But they can do it faster.
Yeah, that's it.
So yeah, yeah, yeah.
Yeah, problem solution.
But yeah, okay, so why can they, why can they do it?
Is it because what is it some sort of privilege?
Or is it bigger orders?
Is it the I mean, I remember seeing years ago, 10-15 years ago, about like Goldman Sachs or something.
TO BE CONTINUED IN SEGMENT 2
Unlocked: What is Spoofing?