• Home
  • What is DCM?
  • Where is DCM useful?
  • Where to start?
  • 8 Questions for a CFO or CPO
  • About
    • Our Leadership
  • Contact
  • Compliance and Monitoring
  • DCM Blog
  • COVID-19
  • Home
  • What is DCM?
  • Where is DCM useful?
  • Where to start?
  • 8 Questions for a CFO or CPO
  • About
    • Our Leadership
  • Contact
  • Compliance and Monitoring
  • DCM Blog
  • COVID-19

DCM Blog 
​Industry, Compliance, Strategy and Regulatory Updates

ICE fines spoofers too

12/17/2018

0 Comments

 
Much of the recent spoofing disciplinary activity has been coming from the CME. However, within the last two weeks ICE US Futures issued a disciplinary notice for "trade practice violations" and "Conduct detrimental to the Exchange" relating to placing of orders without intent to execute. The fact pattern is classic "spoofing" - large orders on one side and smaller on the other. Small orders execute and large order immediately cancelled. The question becomes "what are traders thinking"?
It should be noted, the disciplinary notice talks of a "pattern" of this behavior. We frequently talk to our clients about detecting patterns - one off occurrences may not be controlling.
I had a recent conversation with a client about this activity. I have been on the desk (I helped build one of the largest physical natural gas desks back in the 1990's) and had a competitor step in front of my bid. I raised the bid - they stepped in front again. By the fourth time I said "$%#@* this (or something equivalent), I will sell that price" and hit the bid. That is not spoofing. However, doing that 10 times a day starts too look less and less like I was responding to competitor pressure and more and more like I intended the result. Do it 10 times a day for a week and it is a pattern.
This becomes a question of when the pattern exceeds your compliance risk tolerance? That is the question that a good compliance program allows you to answer - when has this pattern become one I feel is too close to prohibited behavior and the explanation is too thin to accept? That is a question you should be able to answer.
The result in this case was a $15K suspension and a 9 week suspension from trading in the market. The full notice is here - https://www.theice.com/publicdocs/futures_us/disciplinary_notices/ICE_Futures_US_Brian_Soldano_20181205.pdf.
0 Comments



Leave a Reply.

    Thomas Lord

    DCM Founder
    Commodity Adviser

    Archives

    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    February 2020
    January 2020
    December 2019
    November 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    July 2018
    June 2018

    Categories

    All

    RSS Feed

    View my profile on LinkedIn
Proudly powered by Weebly