FSA fines firm £8m for market abuse

The FSA has fined a Canadian trading platform £8m for serious market abuse but the firm has referred the matter to the Upper Tribunal.

The regulator said in a decision notice it intends to fine Swift Trade £8m for manipulative trading on the the London Stock Exchange (LSE) but the non-FSA authorised Canadian firm has referred the matter to the Upper Tribunal.

It will then determine the appropriate action for the regulator to take.

In the decision notice dated 6 May 2011, the FSA set out its decision to fine Swift Trade for systematically and deliberately engaging in a form of manipulative trading known as "layering".

According to the FSA, between 1 January 2007 and 4 January 2008, Swift Trade's manipulative trading caused a succession of small price movements in a wide range of individual shares on the LSE from which the firm made substantial profits.

It estimates the firm's profits were in excess of £1.75m - something the FSA said was a particularly serious case of market abuse.

The FSA added the abuse was both widespread and repeated on many occasions, involving tens of thousands of trading orders by many individual traders across multiple locations worldwide.

Swift Trade's actions created a false or misleading impression of supply and demand and an artificial share price in the shares they traded to the detriment of other market participants.

Such conduct, if unchecked, could undermine market confidence, said the FSA.

It added the size of the proposed fine reflects the serious nature of the market abuse and should act as a deterrent to other market participants.

"The FSA remains committed to tackling abuse of the UK markets - wherever it originates. Interference with the price formation process threatens the integrity of those markets," said Tracey McDermott, acting FSA director of enforcement and financial crime.

Simon Morris of law firm CMS Cameron McKenna said: "Fining a fringe player an enormous amount for market abuse is sending out another powerful message that sleazy malpractices are not tolerated in the City.

"What it also demonstrates is the FSA's resolution to get more and swifter publicity for its work. The FSA has not waited while the firm appeals to the Tribunal but has already published its decision - which only serves to undermine further the firm's position."