CFTC charges Optiver with oil-market manipulation

WASHINGTON (Reuters) - The Commodity Futures Trading Commission on Thursday charged global trading fund Optiver Holding BV with manipulating the NYMEX oil market in March 2007.

Traders work in the oil options pit of the New York Mercantile Exchange March 11, 2008. REUTERS/Chip East

The complaint charged that three employees of the Netherlands-based fund made about $1 million through manipulation of crude oil, gasoline and heating oil futures on the New York Mercantile Exchange NMX.N.

The agency’s enforcement action came a day before the Senate was scheduled to have a major vote on legislation to rein in excessive energy speculation and impose new regulations on traders that the CFTC would have to enforce.

The CFTC’s acting enforcement director, Stephen Obie, denied that the announcement of the case was timed to influence the vote on the bill. “This was not a politically motivated case,” he said.

However, Obie said the case shows that the CFTC has broad powers to police the markets.

According to the complaint, the employees carried out a manipulative scheme known as “banging” or “marking”’ the close.

“Banging the close” refers to the practice of acquiring a substantial position leading up to the closing period, followed by offsetting the position before the end of trading for the purpose of attempting to manipulate prices.

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The agency said the employees in three instances forced futures prices lower and in two instances caused prices to rise.

“Although this alleged energy trading scheme lasted only several days in March 2007, even short-term distortions of prices will not be tolerated by the commission,” said CFTC Acting Chairman Walt Lukken.

The CFTC began its nationwide investigation into oil market manipulation last December.

The agency still has “dozens and dozens” of energy cases under investigation, Obie said.

Editing by Matthew Lewis