The UK Financial Conduct Authority (FCA) today issued a statement regarding warning notices given to three individuals who allegedly engaged in market abuse.
The FCA considers that between 1 June 2016 and 29 July 2016, the individuals, who were traders at a bank, deliberately engaged in market abuse.
Specifically, the trader placed large orders for futures on a trading platform that they did not intend to execute on the opposite side of the order book to small orders which they did intend to execute. They carried on this pattern of placing Misleading Orders on the opposite side of the book to Genuine Orders both individually and in conjunction with each other.
Through the Misleading Orders, the individuals falsely represented to the market an intention to buy or sell when their true intention was the opposite. The individuals’ intention in placing the Misleading Orders was to facilitate the execution of the Genuine Orders.
The FCA alleges that the individuals’ behaviour constituted market abuse within the meaning of Article 12 of the Regulation and in contravention of Article 15 of the Regulation; also within the meaning of and in contravention of section 118(5) of the Act. This is because in placing the Misleading Orders they gave false and misleading signals and a false or misleading impression as to the supply or demand of the futures to which the Misleading Orders related.
The regulator stresses that a warning notice is not the final decision of the FCA. The individuals have the right to make representations to the Regulatory Decisions Committee (RDC) which, in the light of those representations, will decide on the appropriate action and whether to issue decision notices.