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Order and trade data analysis in recent spoofing investigations
Journal of Financial Compliance,
7
(4),
346-352
(2024)
Abstract
This paper examines recent enforcement action by the UK Financial Conduct Authority (FCA) in relation to spoofing and, in particular, the FCA's use of trading data analysis in support of its findings. Data analysis has become an increasingly important part of recent FCA market abuse enforcement actions, particularly with respect to spoofing investigations. Where other evidence of manipulative intent is absent, the FCA may seek to infer such intent from order and trading activity where there appears to be no legitimate explanation for it. But — as this paper explains — any such inference must be based on sound analysis: there must be clarity around the sample on which an observed pattern is based as well as any sampled trading which does not appear to fit the observed pattern and which might therefore point away from manipulative intent.
Keywords: spoofing; market abuse; intent; order and trade data analysis
The full article is available to subscribers to the journal.
Author's Biography
Greg Leonard heads Cornerstone Research's finance practice and its European finance practice. He is also head of the firm's London office. Dr Leonard has over two decades of experience consulting for clients in complex litigation and regulatory proceedings. On behalf of clients, he has led regulatory investigations on both sides of the Atlantic, managing teams and simultaneously supporting experts across multiple related matters. Dr Leonard has substantial experience directing analyses of large and complex high-frequency financial data sets, from both private entities and trading exchanges. Dr Leonard's expertise includes high-profile matters at the intersection of finance and competition. He has evaluated a range of alleged anti-competitive activities in financial and commodities markets, including collusive conduct by various market participants, at both the class certification and merits stages.
Marlene Haas consults on complex financial economics issues arising in securities, corporate transaction and regulatory matters, both in the US and Europe. Dr Haas applies sophisticated economic analyses to market manipulation and disruptive trading issues, crypto token categorisation, commercial uses for FinTech and corporate transactions. Her experience spans a variety of financial assets and industries, with a focus on banking, broker-dealers, trading platforms, FinTech, derivative instruments and cryptocurrency. Dr Haas leads large teams and supports academic and industry experts across all stages of litigation, internal and regulatory investigations and arbitrations.
Oliver Pegden specialises in regulatory enforcement, internal investigations and related High Court litigation. Mr Pegden focuses on financial services and markets issues, including enforcement investigations by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority. He has been seconded to the FCA's Enforcement and Markets Oversight Division.
