FCA fines bond trader for market abuse

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The FCA has fined a former Bank of America Merrill Lynch bond trader for market abuse related a series of trades on Dutch State Loans.

Paul Walter has been order to pay £60,090 for a trading strategy that manipulated prices and prompted other market participants to buy or sell DSLs at worse prices than they would otherwise have done. 

On 11 occasions he lodged high quotes for DSL implying he was a buyer and prompting other market participants to raise their bids. He then cancelled his own quote and sold to those buyers at the higher price.

On one further occasion he did the opposite trade, implying he was selling at a low price causing other market participants to lower their offer price before cancelling his quote and buying at the new price.

The market abuse happened between July and August 2014 and resulted in a profit of €22,000 to Walter’s trading book.

FCA executive director of enforcement and market oversight Mark Steward says: “Market manipulation undermines market integrity and confidence.  

“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.”  

The regulator says Walter did not know his conduct amounted to market abuse, but he was still considered negligent in not realising this.