LONDON (CNN Money)- By Mark Thompson
High speed trader fined $3 million for commodity manipulation
Panther Energy 'spoofed' oil and commodity markets traded on CME exchanges.
Regulators have fined a U.S. high speed trading firm more than $3 million
for manipulating international markets in agricultural commodities and oil.
New Jersey-based Panther Energy Trading and its principal, Michael Coscia,
were fined a total of $3.1 million, and also ordered to hand over at least
$1.4 million in trading profits, for "spoofing" markets in crude oil,
natural gas and other commodities, such as wheat, soybean and corn.
Coscia was accused of using an algorithm to illegally place and quickly
cancel orders to buy and sell futures contracts traded on CME Group (CME)
exchanges and London's ICE during a two-month period, the regulators said.
Regulators said Coscia and his firm would place small sell orders they
wanted to execute, followed by several large buy orders at successively
higher prices that they intended to cancel, with the aim of artificially
inflating the price at which they could sell by creating an impression of
strong demand.
Once the sell order was filled by another market participant, Coscia would
cancel the buy orders and then reverse the process, racking up a profit
from the executions of small orders many times over between August and
October 2011.
"While forms of algorithmic trading are of course lawful, using a computer
program that is written to spoof the market is illegal and will not be
tolerated," said David Meister, enforcement director at the U.S. Commodity
Futures Trading Commission.
Panther and Coscia have been banned from trading on any CTFC-registered
entity for a year, and from CME markets for six months.
The CFTC said this was the first case pursued under Dodd-Frank rules that
explicitly prohibit placing buy or sell orders with the intent to cancel
before executing the trade.
The total financial penalty includes a CFTC penalty of $1.4 million, a CME
fine of $800,000, along with a fine of about $900,000 imposed by the U.K.
Financial Conduct Authority for Coscia's deliberate manipulation of Brent
crude, gas oil and West Texas Intermediate futures contracts on the ICE.
High speed trader fined $3 million for commodity manipulation
Panther Energy 'spoofed' oil and commodity markets traded on CME exchanges.
Regulators have fined a U.S. high speed trading firm more than $3 million
for manipulating international markets in agricultural commodities and oil.
New Jersey-based Panther Energy Trading and its principal, Michael Coscia,
were fined a total of $3.1 million, and also ordered to hand over at least
$1.4 million in trading profits, for "spoofing" markets in crude oil,
natural gas and other commodities, such as wheat, soybean and corn.
Coscia was accused of using an algorithm to illegally place and quickly
cancel orders to buy and sell futures contracts traded on CME Group (CME)
exchanges and London's ICE during a two-month period, the regulators said.
Regulators said Coscia and his firm would place small sell orders they
wanted to execute, followed by several large buy orders at successively
higher prices that they intended to cancel, with the aim of artificially
inflating the price at which they could sell by creating an impression of
strong demand.
Once the sell order was filled by another market participant, Coscia would
cancel the buy orders and then reverse the process, racking up a profit
from the executions of small orders many times over between August and
October 2011.
"While forms of algorithmic trading are of course lawful, using a computer
program that is written to spoof the market is illegal and will not be
tolerated," said David Meister, enforcement director at the U.S. Commodity
Futures Trading Commission.
Panther and Coscia have been banned from trading on any CTFC-registered
entity for a year, and from CME markets for six months.
The CFTC said this was the first case pursued under Dodd-Frank rules that
explicitly prohibit placing buy or sell orders with the intent to cancel
before executing the trade.
The total financial penalty includes a CFTC penalty of $1.4 million, a CME
fine of $800,000, along with a fine of about $900,000 imposed by the U.K.
Financial Conduct Authority for Coscia's deliberate manipulation of Brent
crude, gas oil and West Texas Intermediate futures contracts on the ICE.
