FSA action against various companies and individuals for alleged sophisticated market manipulation
The Financial Services Authority announced two actions last week – see here and here – against various entities and individuals for suspected market abuse comprising “layering”, which the FSA describes as:
“[involving] entering relatively large orders on one side of the LSE order book, which has the effect of moving the share price as the market adjusts to the fact that there has been an apparent shift in the balance of supply and demand. This is then followed by a trade on the opposite side of the order book which takes advantage of, and profits from, the share price movement. This is in turn followed by a rapid deletion of the large orders which have been entered in order to cause the movement in price, and by a repetition of this behaviour in reverse on the other side of the order book.”
The detail of the alleged offences are discussed, with some market perspective, in two posts by FT Alphaville - see here and here.
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