I know someone who used to work at an algorithm trading firm and did electronic market making. He said they used to go to great lengths to program their algorithms to try to spot this sort of manipulation, but it's a hard problem because you're fighting against a cloud of bad traders who are coordinating their efforts across multiple market centers.
I have to say, the regulatory dept. at the exchange I work for does an excellent job of monitoring for any funny business. They have some nifty real-time tools that are scriptable and can replay the state of the market at any point. It's really cool stuff!
I have to say, the regulatory dept. at the exchange I work for does an excellent job of monitoring for any funny business. They have some nifty real-time tools that are scriptable and can replay the state of the market at any point. It's really cool stuff!