French regulator slaps €20m fine on Morgan Stanley & Co for sovereign bond price manipulation

Maria Nikolova

The fine is imposed for the company’s manipulation of the price of 14 French government bonds and 8 Belgian bonds, and also the manipulation of the price of an OAT futures contract.

France’s Financial Markets Authority (AMF) today announces that its Enforcement Committee has imposed a fine of of €20 million on Morgan Stanley & Co International plc for manipulation of the price of sovereign bonds and a sovereign bond futures contract.

The fine stems from the company’s manipulation of the price of 14 French government bonds (OAT) and 8 Belgian bonds (OLO) on June 16, 2015, and also from the manipulation of the price of an OAT futures contract.

The Enforcement Committee has found that, on June 16, 2015, between 9:29 am and 9:44 am, the European Government Bonds Desk at Morgan Stanley & Co International plc, located in London, aggressively purchased a significant number of French sovereign bonds futures contracts (OAT Futures or FOAT) and German sovereign bonds futures contracts (Bund Futures (FGBL) and Buxl Futures (FGBX)) on the German derivatives regulated market, Eurex. At 9:44 am, the traders sold 17 different OATs for €815 million, mainly on the MTS France and BrokerTec electronic trading platforms, and 8 OLOs for €340 million on the MTS Belgium platform.

The Committee found that the company had secured the price of the September 2015 FOAT traded on Eurex, as well as the price of 14 of the 17 OATs and 8 OLOs, at an abnormal and artificial level. The Committee concluded that the purpose of the FOAT acquisitions was to influence a price increase of this financial instrument, in order to cause an abnormal and artificial increase in the price of the OATs and OLOs, because of the correlation links between these instruments, immediately before they were sold.

The Committee determined that these acts constituted price manipulation through the use of a form of deception or contrivance, since the FOAT acquisition was inconsistent with the overall strategy of the European Government Bonds Desk and had the effect of giving other participants a distorted picture of the state of the French sovereign bond market.

However, the Committee dismissed the complaint of price manipulation of FGBL and FGBX, considering that the purpose of the operations on these instruments was not to obtain a certain price quotation so as to influence the price of the OATs.

An appeal may be lodged against this decision.

Read this next

Institutional FX

Euronext’s FX volume takes yet another step back in July

Pan-European exchange, Euronext has reported a 7.6 percent drop in the average daily volume on its spot foreign exchange market. The ADV figure stood at $21.4 billion in July 2022, which is down from June’s $23.1 billion.

Executive Moves

IG Group strengthens institutional sales with appointment of Glen Hastings

IG Group, Europe’s largest online trading platform, has onboarded Glen Hastings to the role of its institutional sales manager. He joins the FCA-regulated broker with immediate effect, based out of its offices in London.

Digital Assets

Voyager customers can withdraw up to $100K in cash via ACH transfer

Following approval of the bankruptcy judge, cryptocurrency brokerage firm Voyager plans to return $270 million in customer cash. The amount represents a small portion of investors’ crypto holding that have been locked up since the company filed for bankruptcy in April.

Retail FX

Britain’s lifeboat system to conclude LCG compensation scheme

Britain’s Financial Services Compensation Scheme (FSCS) said today it’s preparing to close the compensation scheme of the collapsed mini-bond provider, London Capital & Finance.

Uncategorized

Robinhood parts ways with its first CPO Aparna Chennapragada

In what apparently part of the restructuring it announced last month, Robinhood is parting ways with its Chief Product Officer Aparna Chennapragada. However, she’ll remain employed in an advisory role to the CEO through January 2023.

Digital Assets

Crypto.com expands regulatory footprint with new licence in South Korea

Crypto.com has acquired payment service provider ‘PnLink Co., Ltd.’ and virtual asset service provider ‘OK-BIT Co., Ltd.’ The move effectively provides a regulatory stamp for the company’s digital assets and cryptocurrencies business in South Korea.

Metaverse Gaming NFT

Why NFT Technology Could be the Much Needed Solution to Crypto Inheritance 

The digital asset market may have started with Bitcoin’s humble beginning but its fortunes have changed over the past decade.

Industry News

Kohle Capital Markets expands CFDs lineup to 200+ stocks

Kohle Capital Markets (KCM), the leading international provider of online trading, has once again expanded its contracts-for-difference (CFDs) offering, this time with the addition of new products on its trading platform.

Industry News

Kohle Capital Markets continues CSR initiatives with donation of art piece to Lions Club International

Global brokerage firm Kohle Capital Markets (KCM) is taking its corporate social responsibility very seriously and continues to navigate the challenging period brought forth by the pandemic and Russia-Ukraine war.

<