That's how they got that English Guy who was spoofing ES. They had texts and messages where he was specifically outlining what he wanted the orders to do and when he needed them to cancel. No issue proving intent there. He did it himself. But in most other cases, especially if you don't have access to the code, it's more difficult. I suspect that the cases we see and hear about are one where there was long standing record of it, and not odd one off occasions.

Let’s assume for this example that the common notion of a “stop run” is a real thing, how can spoofing be “outlawed” but not “stop running”? Aren’t both just trying to fake out other traders to gain an advantage in this zero sum game?

Can anyone explain why spoofing is considered “bad”?

I’ve never understood the hysteria around it. Shouldn’t market participants be allowed to submit and cancel orders at their own will?

Let’s assume for this example that the common notion of a “stop run” is a real thing, how can spoofing be “outlawed” but not “stop running”? Aren’t both just trying to fake out other traders to gain an advantage in this zero sum game?

My take is that stop runs should be allowed because you are actually placing real orders, that is, orders that you intended to get filled.

With spoofing, though, you are placing orders which you don't intend to have filled. This is at least CME's definition of spoofing, and that's why it's banned.

Can anyone explain why spoofing is considered “bad”?

I’ve never understood the hysteria around it. Shouldn’t market participants be allowed to submit and cancel orders at their own will?

Let’s assume for this example that the common notion of a “stop run” is a real thing, how can spoofing be “outlawed” but not “stop running”? Aren’t both just trying to fake out other traders to gain an advantage in this zero sum game?

Im sure there are more sophisticated arguments, but an obvious difference is that one of these generate fees while the other not necessarily so.

The related Eurex rules seem to be:

(3) Trading Participants must not enter orders or quotes into the system of Eurex
Deutschland unless they intend to conclude a business transaction.
(4) In order to guarantee an orderly futures and options trading, the Trading Participant
or several Trading Participants acting upon mutual consultation may furthermore not
conclude transactions at Eurex Deutschland or enter orders or quotes in the trading
system of Eurex Deutschland that have the potential to influence in an erroneous or
misleading way bid, ask or price of products traded at Eurex Deutschland or to effect
a price not in line with the market or an artificial price level without being in
compliance with a common market practice in accordance with the orderly conduct
of trading pursuant to the Exchange-related legal provisions.


That seems terribly vague to me. Posting some "spoof sells" in order to get buy orders filled ("conclude a business transaction") would not necessarily be forbidden then? Or am I reading this naively? Perhaps it all depends on who is doing it?

EDIT: In the US, CME regs as well as the "Frank-Dodd act" prohibit it. But would this actually be illegal in the EU (on top of breaking Eurex rules) ?