The Financial Conduct Authority has issued formal warnings to three traders from an unnamed bank who carried out market abuse around the time of the 2016 Brexit vote.
The FCA accused the individuals of ‘spoofing,’ a practice where traders place orders on financial assets they do not intend to complete in order to manipulate markets.
In this case, the traders worked separately and together to place large futures orders on assets which pushed their price upwards. They then placed smaller, genuine orders on the assets to profit from the price increase.
In a statement the FCA said it “considers 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.”
Oliver Blower, CEO of VoxSmart, said “spoofing is an unfortune by-product of the fact that certain traders have always, and will always, look to manipulate the markets for personal gain.
“But this does not mean that the industry is full of bad actors. More and more financial institutions are currently looking to reconstruct orders to try and figure out the exact sequencing that takes place,” he added.
The financial watchdog says the misconduct took place between June and the end of July 2016 with the Brexit referendum held on June 23.
The Brexit vote caused a spike in the price of the British pound which shot up to $1.50 when polls closed before crashing by as much as 9.09 per cent when the results were announced.