Bloomberg News reports that Sarao may not have had a material, or even any, impact on the bout of equity market volatility in May 2010 that later became known as the flash crash, according to a draft research report by University of California, Santa Cruz and Stanford University professors dated January 25.
The study, which has yet to be formally released because the authors are still soliciting feedback, claims to be the first to analyze the entire order book on a millisecond level.
The researchers didn’t say whether the 37-year-old Briton is guilty of manipulating Standard & Poor’s 500 Index futures, which is the central plank of the U.S. authorities’ case. And while the authorities have said Sarao contributed to the flash crash, they never identified him as its sole cause.
Sarao could still go to jail for a long time even if he is fully absolved of causing the manic trading episode - he is alleged to have manipulated markets over several years. He faces a 380-year jail sentence if he is convicted on all counts.
To access the complete Bloomberg News article hit the link below: