Gold, Silver Manipulation: CFTC Fines Deutsche, USB, HSBC For Spoofing Markets
(Kitco News)- Three majorEuropean banks have been fined by the Commodity Futures Trading Commission for“spoofing” and manipulating gold and silver markets.
The CFTC announcedMonday that Deutsche Bank, UBS and HSBC face fines totaling $46.6 million.Deutsche Bank was the hardest hit as it was fined $30 million. UBS was orderedto pay $15 million and HSBC was fined $1.6 million.
Spoofing, accordingto some traders, is the result of high-frequency trading and is a manipulationtechnique where bids and offers are placed in bad faith to create amisrepresentation of demand and sentiment in the marketplace. The orders arequickly canceled before being filled.
“Spoofing is aparticularly pernicious example of bad actors seeking to manipulate the marketthrough the abuse of technology. The technological developments that enabledelectronic and algorithmic trading have created new opportunities in ourmarkets,” said James McDonald, director of Division of Enforcement at the CFTC.“As these cases show, we will work hard to identify and prosecute theindividual traders who engage in spoofing, but we will also seek to find andhold accountable those who teach others how to spoof, who build the toolsdesigned to spoof, or who otherwise aid and abet the wrongdoing.”
According to theCFTC, the market manipulation goes as far back as early 2008. The U.S.regulator also noted that USB received a reduced fine compared to Deutsche Bankas it cooperated with the investigation and self-reported the misconducts.
Along with thethree European Banks, the CFTC said that it also fined six individual tradersfor spoofing and manipulating precious metals markets.
The CFTC fines arethe latest in the precious sector that has been mired with manipulationallegations since 2014. In 2014, these three banks along with The Bank of NovaScotia, Barclays and Societe Generale were named in a lawsuit that allegedmanipulation and collusion during the twice-day London gold fix. The 100-yearold auction was replaced with a digital auction mechanism owned by the LondonBullion Market Association.
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.