Release Date: 3rd July 2013
To access the original FCA document, click here.
Summary
Michael Coscia was fined USD 903,176 by the Financial Conduct Authority (FCA) for market abuse, specifically engaging in a manipulative trading technique known as “layering” during a six-week period from 6 September 2011 to 18 October 2011. Coscia used high-frequency trading strategies on the ICE Futures Europe to place and rapidly cancel large orders, creating a false impression of market conditions. This practice aimed to manipulate commodity futures prices by altering perceptions of supply and demand.
The FCA determined that Coscia’s actions constituted deliberate market manipulation, violating section 118(5) of the Financial Services and Markets Act 2000. His manipulative strategies involved placing significant sell orders to create an illusion of substantial supply, thereby lowering prices to buy at a reduced rate. Conversely, he placed buy orders to suggest strong demand, driving prices up before selling at these elevated levels. This sequence was repeated across various commodities, including Brent and Gas Oil, significantly impacting the market.
Key takeaways for other firms from this case include the importance of maintaining market integrity by abstaining from practices that could mislead market participants. Firms should ensure their trading activities are transparent and based on genuine supply and demand, avoiding artificial price manipulation. Compliance with market rules and regulations is crucial to prevent similar penalties and maintain trust in financial markets.
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