The three bond traders, Diego Urra, Jorge Lopez Gonzalez and Poojan Sheth, have each been given a Decision Notice by the Financial Conduct Authority (FCA), for market abuse.
The FCA claims that the three traders placed big misleading orders for BTP Futures that “they did not intend to execute, giving false and misleading signals and a false or misleading impression as to the supply or demand of Italian Government Bond futures (BTP Futures)” between June 1, 2016 and July 29, 2016. They are also said to have been simultaneously placing small orders which they did intend to execute on the opposite side of the order book.
Because of the seriousness of their actions, the FCA also decided to ban all three from performing any functions in relation to regulated activity. A fine of £395,000 ($480,733) has been imposed on Urra, and £100,000 ($121,704) fines each on Lopez Gonzalez and Sheth.
Through the placement of these large misleading orders, Mr Urra and the other traders falsely represented to the market an intention to buy or sell when their actual intention was the opposite.
According to the FCA, these three traders were dishonest and deliberate repeated this pattern of intentional market manipulation on a number of occasions. The regulator identified 31 occasions where Urra carried it out the work by himself, and 98 occasions when he did so acting along with Lopez Gonzalez and/or Sheth.
“Through the placement of these large misleading orders, Mr Urra and the other traders falsely represented to the market an intention to buy or sell when their actual intention was the opposite. The abusive trading strategy was such that it was unlikely the large misleading orders would themselves trade; notably, they were placed away from the touch (that is, the highest price to buy and the lowest price to sell), and were quickly cancelled” the Decision Notice for Diego Urra states.
All three traders have referred their Decision Notices to the Upper Tribunal where they and the FCA will each present their cases.
Read the Decision Notices here for Diego Urra, Jorge Lopez Gonzalez and Poojan Sheth.