High-frequency Speed Trader Optiver Pays $14 Million in Oil Manipulation Case

The Speed Traders Workshop 2012, How High Frequency Traders Leverage Profitable Strategies to Find Alpha in Equities, Options, Futures and FXReuters reported that U.S. regulators had claimed their first victory in a four-year old effort to crack down on oil market manipulation on Thursday, announcing a $14 million settlement with high-frequency trading firm Optiver.

In a ruling that came just two days after U.S. President Barack Obama proposed a renewed campaign against illegal oil trading schemes, the Amsterdam-based company agreed to disgorge $1 million in profits and pay a $13 million civil penalty over allegations it used a rapid-fire tool nicknamed “The Hammer” to influence U.S. oil prices in 2007.

It was the first case brought by the Commodity Futures Trading Commission (CFTC) in its 2008 effort to curb market malfeasance, launched as prices soared toward a record near $150 a barrel in the middle of that year.

The case alleged that traders in Optiver’s Chicago office reaped a $1 million profit by engaging in a practice called “banging the close”, in which the firm attempted to move U.S. oil prices by executing a large volume of deals during the final moments of trading.

While far from the agency’s largest fine, the case was viewed as an important milestone in the CFTC’s efforts to get more aggressive over market manipulation – a charge that has historically been difficult to prove, despite mounting political pressure to take rogue traders to task.

Read More

Advertisements
This entry was posted in Breaking News, CFTC, Regulatory Updates and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s