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Articles on spoofing

The REMIT rules prohibit actual and attempted market manipulation in the gas and power market, as do the MAR rules in other markets. One such manipulation method is “spoofing”, where orders are placed on a market with no intention to execute them, but instead simply to move the price.

This article on the FT web site looks at the clamp down on spoofing in US markets.  This article on the Bloomberg site gives a run through example. Both make interesting reading. A key point to note is that in many cases, orders with a genuine intention can be cancelled and in some cases may appear as spoofing even when they are not. It is possible that certain trading patterns may attract the attention of a regulator, when no abuse exists.

The start of data collection makes this more likely. Market Participants would be well advised to improve their auditing and recording functions internally, so that any external audit can be passed by showing the true intention of an order or trade. The collection of data and raised likelihood of audit also increases the business case for an internal surveillance system, not only to be able to detect possible internal abuse, but also to help  refine processes so that proper intent is recorded in any relevant scenario, where the activity could otherwise be misconstrued.

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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