France’s financial ombudsman rejects investor complaint over Euronext orders annulment

Maria Nikolova

A trader who placed two buy orders at a price 100 times inferior to the average for the securities in question has had his orders annulled by Euronext, with the trader’s complaint rejected by the AMF Ombudsman.

In special cases, Exchanges do have the right to annul orders that have been executed, with one such case being presented to France’s AMF Ombudsman – Marielle Cohen-Branche. Today, Ms Marielle Cohen-Branche said it had to reject the complaint by an investor over his/her orders’ annulment by Euronext, as she found that the Exchange had the right to do so.

The particular case concerns events from May 3, 2017, when an investor whose name is presented as M.D for confidentiality purposes placed two orders at a price of EUR0.03. The transactions were partially executed at this price the same day. Later on the same day, however, the investor found that the orders were annulled.

The financial intermediary whose services M.D has used has explained that Euronext has annulled the orders. M.D has turned to the AMF Ombudsman to appeal the Euronext actions and to reinstate the validity of the transactions.

In examining the case, Ms Cohen-Branche reviewed Euronext’s explanation and saw that the cause for the annulment was “Unrepresentative price”, that is, “aberrant rate”. The Ombudsman examined the average price for the securities in question and found that it was around EUR 3 during the day before and the days that followed. This means that the price at which the orders were executed (EUR 0.03) was 100 times lower than the average.

The pricing for the same instrument indicated by a liquidity provider approached by the Ombudsman was also around EUR 3.

The Ombudsman noted that Euronext’s rules that are available on the website of the Exchange specify the right of the Exchange to annul orders, including ones that are executed, in certain circumstances, such as “unrepresentative price”.

Ms Cohen-Branche has informed the investor that she cannot support the complaint, as the orders were annulled in line with the market rules. She admitted that such situations may be very discouraging for investors but emphasized that the rules exist to maintain the market stability and credibility.

The AMF Ombudsman can be involved in any dispute that is within the jurisdiction of AMF, the French financial markets regulator. This includes: financial product marketing, asset management, transmission and reception of stock market orders, account keeping services for a securities account, personal equity plans, etc.

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