Not knowing who are the insiders and who is the dumb flow is like the fundamental problem of hft

iknowSFR 6 hours ago | parent | next [-]

You can trade on non-public information if you obtain that information unintentionally. Now you have to be able to prove it’s unintentional if the question came up. A real experience example of this is if you work in an office building and your neighboring company, a public company, is being raided by the FBI. Can you use that information to take a position in the market? Yes, according to multiple attorneys we spoke with.

I bring this up because we assume the trading is coming from insiders but I wonder if the parties behind this have baked in a layer similar to my story above.

To close this back to your comment, and I don’t have an answer here: is knowing who the insiders are and acting on that a crime? If you did know and didn’t report them, are you breaking a law? Or worse, you reported it to the deaf ears of a regulator that are focused elsewhere or are under resourced to respond now?

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huorricannes 5 hours ago | parent [-]

intentionally/unintentionally is not relevant.

it's legal to follow FBI cars and see who they raid so as to make trades. you could even have a hedge fund specialized on this. it's called alternative data

you can even be a regular employer of a public company and trade based on information sent on internal emails.

the only thing illegal is to be a designated insider - typically a restricted group of people with access to sensitive information

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JumpCrisscross 5 hours ago | parent [-]

> you can even be a regular employer of a public company and trade based on information sent on internal emails

You absolutely cannot.

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Supermancho 4 hours ago | parent [-]

"cannot" here meaning it's likely to be prosecuted, not that you cannot. You absolutely can.

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anonymars 4 hours ago | parent | next [-]

This interpretation is incredibly unlikely. The first and third paragraphs discuss legality, but the middle one was merely talking about likelihood of prosecution?

Even then it would be inaccurate: the regulators are not too stupid to put two and two together that you work for a company and got incredibly lucky with your trade

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Supermancho 3 hours ago | parent [-]

To be clear, I was responding about trading on internal communications, not specifically a raid. The practice of using internal communication to guide trading runs contrary to most company policies. I happen to have worked at a company where this kind of practice was both acknowledged and openly discussed. It was a strange place.

> the regulators are not too stupid to put two and two together that you work for a company and got incredibly lucky with your trade

You’re implying some specific combination of factors, but it’s not clear what you mean. What qualifies as "timing"? Around earnings, when trading volume is highest or just around some event? And what exactly counts as "lucky"?

Why would regulators scrutinize a sub-$25k purchase of my own company’s stock? That concern feels overstated. Granted, I’m not a lawyer. In practice I can place a trade at any time. If someone is routinely making $20k–$30k transactions, that alone is unlikely to trigger scrutiny.

The claim that you "absolutely cannot do this" is simply incorrect. I stand by that.

	▲	anonymars 3 hours ago \| parent \| next [-]
		Looks like you're one of today's lucky 10,000* to learn that insider trading is very much illegal! Here's a few examples: https://www.sec.gov/spotlight/insidertrading/cases.shtml Some further advice on the matter: https://www.bloomberg.com/view/articles/2018-08-12/the-10-la... 10 Laws of Insider Trading 1. Don’t do it. 2. Don’t do it by buying short-dated out-of-the-money call options on merger targets. 3. Don’t text or email about it. 4. Don’t do it in your mother’s account. 5. Don’t do it by planting bombs at a company and shorting its stock. 6. Don’t do it while employed at the Securities and Exchange Commission. 7. Don’t Google “how to insider trade without getting caught” before doing it. 8. If you didn’t insider trade, don’t forget and accidentally confess to insider trading. 9. If you are going to insider trade, do it in a company that is far away from a Securities and Exchange Commission office. Like, physically. 10. If you are already under a federal ethics investigation about your ownership or promotion of a stock, don’t insider trade that stock. * https://m.xkcd.com/1053/
	▲	JumpCrisscross 2 hours ago \| parent \| prev [-]
		[dead]

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4 hours ago | parent | prev [-]

[deleted]

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3eb7988a1663 6 hours ago | parent | prev | next [-]

How is there enough volume to cover the other side of the bet with these minutes-before trades?

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andrepd 6 hours ago | parent [-]

The oil market is, to put it mildly, fucking huge

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JumpCrisscross 5 hours ago | parent | next [-]

> oil market is, to put it mildly, fucking huge

Sure. But these aren't trades in "the oil market." They're bets on Polymarket and a specific oil-futures exchange.

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3eb7988a1663 6 hours ago | parent | prev | next [-]

For sure, the real trading markets are huge. I mean the betting platforms.

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huorricannes 5 hours ago | parent [-]

the betting markets offset positions with the real markets. it's all connected

	▲	JumpCrisscross 5 hours ago \| parent [-]
		> betting markets offset positions with the real markets Need a strong source for this. The size (and regulatory) disconnect between the two would seem to make making markets in both a bit silly.

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OutOfHere 6 hours ago | parent | prev [-]

Are you implying that there is arbitrage between the prediction market and the real market? Until now we were assuming that the prediction market is self-contained, with its other side staying within the confines of the prediction market.

	▲	huorricannes 5 hours ago \| parent [-]
		the other side can and many times is an arbitrageour which has positions in both the prediction market and the real market

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cout 5 hours ago | parent | prev | next [-]

In theory that is part of what was supposed to have been solved by CAT.

	▲	phrygian 4 hours ago \| parent [-]
		What is CAT?

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paulpauper 4 hours ago | parent | prev | next [-]

insiders would presumably be bigger trades that show high conviction about improbable events. An insider would wait until the last minute to take advantage of low prices of a market close to expiration.

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6 hours ago | parent | prev [-]

[deleted]