In settling the CFTC case, Daewoo will pay $700,000 though it didn‘t
admit or deny the agency’s allegations.To get more news about
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The Commodity Futures Trading Commission (CFTC) today settled a spoofing
case with South Koreas Mirae Asset Daewoo, who the agency said its
traders made profits by entering spoofing orders in futures traded on
the Chicago Mercantile Exchange (CME).
The ex-traders at Daewoo Securities Co. Ltd, a company Mirae acquired
after the spoofing issue, on numerous occasions placed orders to buy or
sell futures contracts with the intent to cancel those orders before
they were executed. The spoofing scheme ran from at least December 2014
through April 2016 and focused on E-mini S&P 500 contracts listed on
the CME futures market.
In settling the CFTC case, Daewoo will pay $700,000 though it didn‘t
admit or deny the agency’s allegations. The CFTC also credited Mirae for
its cooperation since learning of the traders‘ misconduct, which the
regulator says it expedited the resolution of this matter and reduced
the monetary penalty.
Spoofing, in general, is a practice in which a trader floods the
marketwith fake orders by entering and quickly canceling large buy or
sell orders on an exchange, in order to fool other traders into thinking
that the market is poised to rise or fall.
Regulators stepped up their policing of spoofing
The CFTC described the alleged plot, explaining one strategy that
Daewoos traders employed and involved three steps. First, the trader
placed orders without intending to execute them to try to move prices in
their favor.
While theres nothing wrong with canceling orders, the regulator said
the trader capitalized on the increased buying or selling interest that
spoof orders created. He placed the genuine order, which he intended to
execute, on the opposite side of the market. Third, the spoof orders
were canceled within seconds of the genuine order being filled and only
after prices moved in the direction the spoofer wants.
As such, Daewoos traders falsely represented they had made bids, and
while non-existent trades had taken place to create an illusion to
encourage other investors to trade against their genuine orders and move
the market for their own benefit.
Deutsche Bank, HSBC, and UBS were all hit by spoofing penalties, the
largest of which was a $30 million fine for Germanys biggest bank. The
Swiss bank UBS has also found itself facing similar accusations after
some of its spot traders used phony trade orders to manipulate precious
metals futures traded on the COMEX.
