Oil trader must pay $4.5 million for 'spoofing' markets

23 July 2013

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24 July 2013 | Will Green

An oil trader has been hit with fines and penalties totalling $4.5 million (£2.9 million) for manipulating the price of oil in markets in the UK and US.

Michael Coscia, based in the US, used a computer algorithm to unlawfully “spoof” the futures market by raising and lowering prices with orders that were quickly cancelled.

According to regulator the Financial Conduct Authority (FCA), between 11 September and 18 October 2011, Coscia placed thousands of orders for oil on the ICE Futures Europe exchange in the UK, generating a profit of $279,920 (£182,407).

Tracy McDermott, director of enforcement and financial crime at the FCA, said: “Coscia was cheating the market and other participants. High Frequency Trading and the use of algorithms are an important and commonplace part of the markets nowadays but in this case these techniques were deliberately designed to abuse the market, undermining its integrity.

“This is unacceptable, which is why we have taken tough action to punish Coscia and deprive him of the benefit he acquired.”

 The FCA fined Coscia £597,993, while US regulator the Commodity Futures Trading Commission and the Chicago Mercantile Exchange also imposed penalties and banned him from trading for a year.

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