Rajiv Sethi in the NY Times:
The Trader as Scapegoat: A British trader, Navinder Singh Sarao, is facing extradition to the United States. Federal prosecutors accuse him of having significantly contributed to the “flash crash” of May 6, 2010, in which major American stock markets plunged dramatically in a matter of minutes. Prosecutors also say that he manipulated prices on the Chicago Mercantile Exchange for years by “spoofing,” or placing orders that he intended to cancel before they were filled.
In fact, this is a common activity in equities markets today. The prosecution of Mr. Sarao is arbitrary, and his contribution to the flash crash was negligible.
Regulators should direct their attention instead to far more damaging practices — for example, high-speed strategies that exploit the fragmented nature of our trading systems to make profits purely on timing and speed. ...