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Manipulation cases

The global financial, commodity and energy markets have seen increased scrutiny from regulators over the last few months, particularly in terms of anti manipulation activity.  In Europe, rule sets such as MAR and REMIT are starting to bite, which is causing market participants to increase anti abuse measures. This rise in diligence is also being seen in the energy markets, with ACER releasing a paper on wash trades a few months ago (see here).

Much of the focus has been on the rigging of benchmarks. For example, this article on the FT website reports on a settlement reached by Deutsche Bank with regulators over allegations of “rate rigging”. This article on the Fund Strategy web site looks at a case brought by the US Department of Justice against two managers at Société Générale for their alleged role in a Libor manipulation scheme.

This report on the Reuters web site highlights the closeness of an apparently large settlement made by Barclays with FERC for alleged power market manipulation. Also in the US, several cases relating to “spoofing” have been brought. This post on the Lexology web site by Shearman and Sterling LLP reports on such a case brought in the US against Arab Global Commodities DMCC which has resulted in sanctions. The CFTC press release can be found here. A fine has also been issued by the CFTC (see here) against Logista Advisors LLC for supervision failure, i.e. failing to monitor for manipulation and find an instance of spoofing. According to the press release, the case also involved the UK’s FCA, with the manipulation in question being at last partially carried out on a “foreign futures exchange”.

In the European energy markets, this article on the Romania Insider web site reports on allegations made by politicians against OMV Petrom that they have been engaging in “withholding” generation from the market. The allegations are denied.

Overall, the focus by energy market participants in anti abuse measures, be they specific monitoring measures such as training, improved procedures or the implementation of anti abuse technology, or general measures in terms of the maturity of compliance organisations, has led to increased activity in this areas. Evidence to support this can be seen in papers such as this best practice paper published by Nordpool, which has been created together with several market participants. It would appear that a combination of regulation, enforcement and a desire to follow best practice is pushing the industry to a more mature compliance model.

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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