Tag: Spoofing

Spoofing

Former UBS Trader Fined by US Court for Spoofing

A US District Court in Connecticut has issued a Final Judgment and Consent Order against Andre Flotron, a former precious metals trader for UBS, requiring him to pay a $100,000 civil monetary penalty for spoofing and engaging in a deceptive or manipulative scheme through his spoofing in violation of the Commodity Exchange Act (CEA) and CFTC Regulations.
The Order also imposes a one-year trading and registration ban. Flotron was one of eight traders from three institutions charged by the Commodity Futures Trading Commission (CFTC) over a spoofing scheme.

And Another Thing…

We all know the traditional description of spoofing – placing bids and offers down the stack, with no actual interest in trading. But what about an FX trader using last look? Spoofing is about intention to deal, but does someone deliberately using last look in the wrong fashion have that intention? I would suggest they do not and the Foreign exchange industry might want to look at how it monitors last look if it is not to attract the unwanted attention of the authorities.

And Finally…

Regular readers will know I have what I believe to be a healthy level of scepticism over the use of AI and machine learning in trading.
What will give me more confidence is the better embracing of adversarial AI, for only by imbuing an algo with a certain amount of cynicism will we empower it to trade effectively in markets because, and this is a point I have made before in these pages, it is quite easy to spoof an algo.

CFTC, DoJ Charges Former Tower Traders Over Spoofing

The US Commodity Futures Trading Commission (CFTC) has issued an Order filing and settling charges against Kamaldeep Gandhi, in which Gandhi admits to engaging in manipulative and deceptive schemes, along with other individuals, which involved thousands of acts of spoofing with respect to a variety of futures products traded on the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, and the Commodity Exchange (Comex).
At the same time the US Department of Justice (DoJ) charged Gandhi and two alleged co-conspiritors, Bruce Mao and Krishna Mohan, with spoofing offenses and says Gandhi and Mohan have admitted to the charges.

In the FICC of It

This week’s podcast was delayed because Galen Stops had difficulty connecting from Peru…that or the fact that our podcasters were intimidated by the quality of their guests the previous week and knew they couldn’t match the standard!
They overcome the fear factor, however and go on to discuss the local market in Peru as well as the broader issue of NDF market development, during which Colin Lambert thinks he sees positive signs coming out of Asia regarding electronification of these markets.

And Finally…

I quite like reading academic papers on the FX market structure – often they state the obvious, but just as often they get the hamster back on the wheel in my head.
An interesting paper on spoofing and pinging in OTC FX markets was released recently, which does a great job of highlighting why platforms need to be on top of behaviour; how some LPs are nothing of the sort and how others’ behaviour could be confused with spoofing but shouldn’t be. The paper also provides support for my argument that Mark Johnson’s conviction should be over-turned.

CFTC Hands Out Fines to Deutsche Bank, UBS, BNP Paribas

The US Commodity Futures Trading Commission (CFTC) has fined Deutsche Bank $70 million for attempted manipulation of the ISDAFIX benchmark and $30 million for manipulation, attempted manipulation, and spoofing in the precious metals futures markets. UBS has also been fined $15 million for attempted manipulation and spoofing in the same markets.

One of the CFTC Orders finds that over a five-year period, beginning in at least January 2007 and continuing through May 2012, Deutsche Bank Securities (DBSI) made false reports and through the acts of multiple traders, attempted to manipulate the US Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX),

And Another Thing…

Spoofing is the low hanging fruit for prosecutors thanks to it being easy – especially on regulated venues – to spot. But this visibility should not just be about bringing charges, it should be used for preventative means. What interests me is how these alleged spoofers thought they could get away with it and in reality the only way they did is because the surveillance procedures in place at venue and institutional level were either too slow, inadequate, or non-existent.

And Another Thing…

Last week in Illinois saw the US government respond to a motion to dismiss its indictment of Jitesh Thakkar, who is accused of aiding and abetting Navinder Sarao in his spoofing activities by providing him with the technology to conduct that strategy. The case has some serious implications for fintechs and software programmers to the financial markets industry generally, but what I really want to know is; assuming a successful conviction, what will the US Gun Lobby make of it?

CFTC Files Spoofing Charges Against Three Banks, Five Individuals

The US Commodity Futures Trading Commission (CFTC) has filed a total of eight charges against three banks and five individuals for spoofing in precious metals markets as well as other futures contracts.
The Commission issued orders filing and settling charges against Deutsche Bank, requiring it to pay a $30 million fine; UBS, which is to pay a $15 million fine; and HSBC, which will pay $1.6 million. All three banks consented to the orders without admitting or denying any of the accusations.