Thu, Aug 5, 2021
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

The AMF Enforcement Committee fines a German company and its CEO for manipulating the price of a sovereign bond futures contract

Tuesday, June 08, 2021
Opalesque Industry Update - In its decision of 28 May 2021, the Enforcement Committee imposed a fine of €1.2 million on each of the respondents, Global Derivative Trading GmbH and its CEO, Thorsten Wagner, for manipulating the price of a French sovereign bond futures contract.

Between 1 July and 13 October 2015, the German company Global Derivative Trading GmbH issued orders on Eurex, the German derivatives regulated market, for futures contracts notably with French fungible Treasury bonds as the underlying asset (FOAT).

The Committee first declared that it had jurisdiction to deal with the breaches of price manipulation alleged against the company and its CEO, on the grounds that the FOAT contracts in question were to be considered as financial instruments linked to the underlying French sovereign bond, traded on venues supervised by the AMF and with which these contracts were closely correlated.

On the merits, the Committee found that during 303 sequences on the FOAT, the involved company had placed orders that gave misleading signals as to the supply of, demand for and price of the FOAT. In this respect, the Committee noted that the company had issued passive orders for significant and atypical quantities of contracts, which created strong pressure on one side of the order book at the three best limits, thus creating some doubt as to the reality of supply and demand, before the mass cancellation of these orders. The Committee also found that the investigation data established that the company's passive orders, described as decoy orders, had distorted the representation of supply, demand and price of the FOAT for all the sequences in question.

The Committee considered that the company's interventions in 207 sequences on the FOAT constituted price manipulation, insofar as these interventions secured it a dominant position in the order book, resulting in the creation of unfair trading conditions.

In assessing the sanctions, the Committee took into account, in particular, the seriousness of the breaches, the amount of profit made, estimated at almost €340,000 for 180 sequences on the FOAT, and the prejudice for other market participants who suffered from the unfair trading conditions on the FOAT.

Between 1 July and 13 October 2015, the German company Global Derivative Trading GmbH issued orders on Eurex, the German derivatives regulated market, for futures contracts notably with French fungible Treasury bonds as the underlying asset (FOAT).

The Committee first declared that it had jurisdiction to deal with the breaches of price manipulation alleged against the company and its CEO, on the grounds that the FOAT contracts in question were to be considered as financial instruments linked to the underlying French sovereign bond, traded on venues supervised by the AMF and with which these contracts were closely correlated.

On the merits, the Committee found that during 303 sequences on the FOAT, the involved company had placed orders that gave misleading signals as to the supply of, demand for and price of the FOAT. In this respect, the Committee noted that the company had issued passive orders for significant and atypical quantities of contracts, which created strong pressure on one side of the order book at the three best limits, thus creating some doubt as to the reality of supply and demand, before the mass cancellation of these orders. The Committee also found that the investigation data established that the company's passive orders, described as decoy orders, had distorted the representation of supply, demand and price of the FOAT for all the sequences in question.

The Committee considered that the company's interventions in 207 sequences on the FOAT constituted price manipulation, insofar as these interventions secured it a dominant position in the order book, resulting in the creation of unfair trading conditions.

In assessing the sanctions, the Committee took into account, in particular, the seriousness of the breaches, the amount of profit made, estimated at almost €340,000 for 180 sequences on the FOAT, and the prejudice for other market participants who suffered from the unfair trading conditions on the FOAT.

An appeal may be lodged against this decision.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. New Launches: Apollo investors look past Black-Epstein tie to back impact fund, Leeds Equity closes in on $1.25bn for its seventh buyout fund, Schroders Capital surpasses $389m for its fifth European infrastructure senior debt fund, Neuberger Berman closes NB Private Equity Impact Fund at nearly $280m, HSBC AM launches fintech venture capital strategy, Slate rounds up close to $600m for first credit fund, Trifecta Capital raises $130m for close of VC fund, Lumira Ventures closes on $255m of new capital to build transformative healthcare companies[more]

    Apollo investors look past Black-Epstein tie to back impact fund From Bloomberg: The backlash against Apollo Global Management Inc. over Leon Black's ties with sex offender Jeffrey Epstein is waning, with investors lining up to entrust the firm to manage investments dedicated to social

  2. Investing: Tiger Global: The technology investor ruffling Silicon Valley feathers, Addepar raised $150m from hedge fund D1[more]

    Tiger Global: The technology investor ruffling Silicon Valley feathers From FT: For the first 15 years of running Tiger Global Management, Chase Coleman wore a suit every day in the hopes that investors would look past his inexperience. Today, his firm faces a different kind of reputat

  3. SPACs: SPAC IPOs show time is money with speedier deal chases, Pershing Square Tontine has almost no risk left after its merger imploded, Lending platform Kredivo to go public via $2.5bn SPAC merger, SPAC-on-SPAC deal falls apart, and so does Immunovant's stock, Grab loss narrows on food delivery ahead of U.S. SPAC merger[more]

    SPAC IPOs show time is money with speedier deal chases From Bloomberg: SPAC bosses are finding they have to speed up their deal hunt if they want to attract investors these days. About half the blank-check companies that filed for U.S. listings since the start of June are giving th

  4. Goldman's China hedge fund clients had second-worst month ever, Tiger Global almost breaks even in July despite China stock rout, Hedge fund Alphadyne loses $1.5bn in rates short squeeze[more]

    Goldman's China hedge fund clients had second-worst month ever From Bloomberg: Goldman Sachs Group Inc.'s hedge fund clients focused on Chinese stocks recorded their second-worst monthly loss ever in July, according to client data compiled by the bank. Fundamental long-short m

  5. SPACs: As SPAC creators get rich, how incentives are shared remains murky, Singapore's fintech firm FinAccel to list in U.S. via $2.5bn SPAC deal, Grab partially delivers the goods ahead of SPAC, Cohen SPAC to merge with business services firm Pico[more]

    As SPAC creators get rich, how incentives are shared remains murky From WSJ: Many investment executives who back special-purpose acquisition companies are scoring big paydays as more deals get completed. Some of their clients are missing out. The divergence results from the varying m