REGULATION

FCA lands ex-BAML trader with market abuse fine

The FCA has fined the BAML broker over £60,000 for creating a "false and misleading impression” of supply and demand.

By Hayley McDowell hayley.mcdowell@strategic-i.com November 22, 2017 11:13 AM GMT

The UK’s Financial Conduct Authority (FCA) has handed a former Bank of America Merrill Lynch (BAML) bond trader a fine for engaging in market abuse.

Paul Walter received the penalty of £60,090 after the regulatory watchdog found he had created a “false and misleading impression” of supply and demand in the market for Dutch State Loans (DSL).

The FCA said he did this on 12 occasions in July and August 2014, resulting in profit of €22,000 to his trading book.

“Market manipulation undermines market integrity and confidence,” said Mark Steward, executive director of enforcement and market oversight at the FCA.

“The FCA will be vigilant in detecting abusive practices and will take robust action to protect issuers and participants from all over the world from the harm caused by such abuse.” 

According the UK regulator, Walter entered a series of quotes that became the best bids on BrokerTec on 11 occasions, giving the impression that he was a buyer in a DSL.

The FCA discovered that other market participants who were tracking his quotes with algorithms followed him in response and raised their bids, before he then sold to those other participants and cancelled his own quote. 

 

Despite placing quotes that suggested he wanted to buy, he actually sold the DSL, the FCA said.