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Traders banned and fined over wash trades and spoofing

Last Friday the CME banned and fined two traders for market manipulation on several of their North American markets, including some commodity markets, according to this article on the Reuters website. One of the bans was for the execution of wash trades,  i.e. trades where the same party executes uneconomic buys and sells in the same product simultaneously. In this case the intent was to transfer a balance from one account to the other. The second ban was for spoofing, the practice of placing orders with no intent to execute (ie purely to move the price).

These practices are also banned under REMIT in Europe, although REMIT is focused on gas and power trading. Next year will see the coming into force of the Market Abuse Regulation(MAR). which will outlaw many abusive practices in commodity derivatives and spot trades. These are in addition to the rules that govern each actual market.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.


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