For the first time ever, the Financial Conduct Authority (FCA) has taken action against a high frequency trader, and fined the US professional £597,993 for "deliberate manipulation of commodities markets".
Michael Coscia is said to have placed false orders for Brent Crude, Gas Oil and Western Texas Intermediate (WTI) futures from the US on the ICE Futures Europe exchange (ICE) in the UK.
Taking advantage of the price movements generated by his layering strategy, Coscia made a profit of US $279,920 over the 6 week period of trading at the expense of other market participants – primarily other High Frequency Traders or traders using algorithmic and/or automated systems.
The US regulator, the Commodities and Futures Trading Commission (CFTC) and the Chicago Mercantile Exchange (CME) are announcing today that they have imposed fines for similar market manipulation by Coscia on US markets. The FCA has worked closely with ICE, the CFTC and CME to bring this action against Coscia and would like to thank them for their co-operation.
Tracey McDermott the FCA’s director of Enforcement and Financial Crime said:
Mr Coscia was cheating the market and other participants. High Frequency Trading and the use of algorithms are an important and commonplace part of the markets nowadays but in this case these techniques were deliberately designed to abuse the market, undermining its integrity. This is unacceptable, which is why we have taken tough action to punish Coscia and deprive him of any benefit he acquired.