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Prison sentence for “layering” in US

Michael Coscia, who was last year was convicted of spoofing/layering in the US, has now been sentenced to a three year custodial term for the offence. Articles on the sentencing can be found here on Reuters and here on Bloomberg.

The case refers to the use of “layering” to manipulate the market. This involves placing large orders, with no intention of execution, above/below the current bid/offer price, at increasing/decreasing levels, and then pulling them. Profit is made when a smaller and opposing “resting order”, initially outside of the market range, is filled. The resulting position is then often crystallised into a gain with a similar exercise performed in the opposite direction. Bloomberg’s “QuickTake” on spoofing can be found here.

Coscia was also fined by the FCA for the same offence on UK markets in 2013. The notice can be found here.

This sentence continues the trend of increased vigilance by regulators and authorities against market abuse. The start of MAR on July 3rd, and the passing  of the REMIT reporting deadlines on July 6th, have resulted in an increased focus on anti abuse measures and effective monitoring initiatives in Europe. it is likely that this trend will continue as the rules “bed in”.

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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