CFTC Accuses Firm Manually Entering Orders Of Spoofing Scheme That Fooled Algorithmic Traders

Potentially abusive trading algorithms, such as algorithms that purportedly engage in "spoofing" or "layering" are the subject of considerable regulatory interest.  However, in an interesting complaint filed on October 19, 2015, the CFTC alleged that a firm manually entering futures orders engaged in illegal spoofing that appears to have lured algorithmic traders into the market. 

The CFTC charged Chicago-based trader Igor B. Oystacher and his proprietary trading company, 3 Red Trading LLC ("3 Red"), with spoofing and employment of a manipulative and deceptive device while trading on four different futures exchanges in violation of Dodd-Frank.  The statute defines "spoofing" as bidding or offering with the intent to cancel the bid or offer before execution.