Inside a high-frequency commodities outfit

Way back in July 2008, the CFTC charged a little known Chicago company called Optiver with manipulating the price of oil. The suit has drawn little attention to date, but the New York Times has just taken a fresh look and offers an interesting look at how some trading practices can really whip the market.

On one hand, the firm does what a lot of firms purport to do: Add liquidity by making markets, as well as trading for their own accounts. It uses the techniques of high-frequency trading and seems aware of its ability to move prices. Transcripts show that Optiver employees openly talked among themselves of "whacking" and "bullying up" the price of oil, the Times notes.

NYMEX regulators felt their behavior went beyond mere market making. One issue is whether Optiver is unique. Or whether other companies can similarly affect the market.

For more:
- here's the article

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