Market Manipulation & Spoofing (From Pit Trading to Big Data)

Fri Sep 16 00:00:00 EDT 2016
By Dr. Sharon Brown-Hruska

What is the precise threshold for market manipulation?

When the CFTC issued its pivotal Indiana Farm Bureau decision in 1982, it became the standard of proof for market manipulation. The decision required that intent to create artificiality in pricing had to be present in order for regulators to pursue enforcement actions. Following the enactment of the Dodd-Frank Act in 2010, the CFTC argued that it could pursue enforcement actions where no intent to create artificiality exists.

The difference between market manipulation and legitimate trading strategies is a fine line. How the CFTC interprets trading decisions is evolving, as are market participants’ approaches to risk.

Read Dr. Brown-Hruska’s byline article, originally published by The Risk Desk, to learn more about market manipulation.  Dr. Brown-Hruska calls upon her experience as Commissioner and Acting Chairman of the CFTC, as well as her experience as an expert witness in HFT, benchmark, energy, and derivatives markets manipulation matters, to explain how the CFTC’s push for a lower standard of proof in manipulation cases should be taken into consideration in a company’s compliance and risk management efforts, and ultimately may affect markets.

Reprinted with permission of the publisher, Scudder Publishing Group, LLC. Copyright 2016.