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UK’s FCA fines Former Bank of America bond trader over market abuse

BBR Staff Writer Published 23 November 2017

The UK’s Financial Conduct Authority (FCA) has imposed a £60,090 fine on former America Merrill Lynch International’s (BAML) bond trader Paul Walter for involving in market abuse.

The authority's investigation revealed that Walter has created false and misleading impressions related to Dutch State Loans (DSL) for 12 times between July and August 2014.

For 11 times, Walter posted a series of quotes that became the best bids on electronic trading platform, BrokerTec.

Based on Walter’s quotes, other market participants increased their bids. Later, Walter cancelled his own quote and sold to other participants.

According to FCA, Walter did the opposite by pulling market participants to follow him with the result he bought the DSL from the market participants who had recently lowered their offer price and then cancelled his own quote.

FCA noted that Walter’s trading has affected market behavior as his trading strategy manipulated their prices and made them either buying or selling DSLs at worse prices.

Walter has added up to €22,000 to his trading book as a result of abusive trading.

FCA enforcement and market oversight executive director Mark Steward said: “Market manipulation undermines market integrity and confidence.

“The FCA will be vigilant in detecting abusive practices and will take robust action to protect issuers and participants from all over the world from the harm caused by such abuse.”

FCA monitors all regulated financial firms that are not supervised by the Prudential Regulation Authority (PRA).

Image: The FCA has fined bond trader Paul Walter for engaging in market abuse. Photo: courtesy of JanPietruszka / FreeDigitalPhotos.net.