A former Bank of America Merrill Lynch bond trader has been dumped with a £60,090 fine from the UK's financial watchdog for engaging in market abuse.
Paul Walter, who was termed an “experienced trader” by the Financial Conduct Authority (FCA), was today found guilty of engaging in market abuse “by creating a false and misleading impression as to supply and demand in the market for Dutch State Loans”.
This conduct, which took place on 12 occasions in July and August 2014, resulted in a profit of €22,000 to Walter's trading book.
“Market manipulation undermines market integrity and confidence. The FCA will be vigilant in detecting abusive practices and will take robust action to protect issuers and participants from all over the world from the harm caused by such abuse,” said the FCA's executive director of enforcement and market oversight, Mark Steward.
On 11 occasions, Walter entered a series of quotes which became the best bids on electronic trading platform BrokerTec. These gave the impression that he was a buyer in a Dutch State Loan, and other market participants who were tracking his quotes with algorithms raised their bids.
Walter then sold to those other participants and cancelled his own quote.
On another occasion, he did the opposite – he bought a Dutch State Loan from market participants who had recently lowered their offer price, then cancelled his own quote.
The FCA did not find that Walter knew he was committing market abuse, but considered he was negligent in not realising that his behaviour was wrong.
The decision comes just a month after the FCA hit Merrill Lynch with a mega £34.5m fine for not reporting tens of millions of derivative trades over a two year period.