CHICAGO (Reuters) - CME Group Inc urgently suspended a futures trader from its markets for spoofing on Monday, the exchange operator said, the latest regulatory action over the manipulative trading practice.
The company, which owns Comex, the Chicago Mercantile Exchange and other markets, barred Andrey Sakharov from trading for 60 days and could extend his ban, according to a disciplinary notice.
Contact information for Sakharov could not immediately be found.
CME suspended him based on “a good faith determination that there are substantial reasons to believe that such immediate action is necessary to protect the best interests of the exchange,” the disciplinary notice said.
On multiple dates starting last month, Sakharov entered electronic orders in CME’s gold and natural gas markets that he did not intend to trade, the disciplinary notice said.
The practice of placing bids to buy or offers to sell contracts with the intent to cancel them before execution is known as spoofing and is illegal. It is used to create an illusion of demand in markets, so that spoofers can influence prices to benefit their market positions.
Sakharov repeatedly placed large and small orders on opposite sides of the August 2016 gold and natural gas futures markets while improperly using an account in someone else’s name, CME said. Less than 100 milliseconds later, he generally canceled the large orders and the small orders were filled, according to the notice.
Sakharov also entered trades for at least four other accounts held in other people’s names, the notice said.
He told a trading firm that while “he wanted to have individual access to these accounts, as well as future accounts he planned on opening with the firm, he did not want to be officially associated with the accounts since he was concerned that he may be banned from trading,” the notice said.
The trading firm, which was not named, told CME that an account Sakharov used “was reported to the Cyprus Securities and Exchange Commission following suspicions of money laundering,” the notice said.
In an unrelated case that began last year, two metals traders that CME suspended for spoofing through the same process used to discipline Sakharov were eventually banned permanently from U.S. trading.
Last month, a U.S. judge sentenced trader Michael Coscia to three years in prison for spoofing on futures markets run by CME and rival Intercontinental Exchange Inc. He was the first person criminally convicted of spoofing.
Reporting by Tom Polansek; Editing by Jonathan Oatis and Sandra Maler
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