The FCA has banned and fined a bond trader £662,700 for attempting to manipulate the Bank of England’s quantitative easing trading.
Mark Stevenson intended to sell his holding in a UK Government gilt, worth £1.2bn, to the Bank of England in October 2011 for an artificially high price.
He increased his holding in the run-up to the trading with the intention of raising its price. His unusual trading was reported and the Bank decided not to buy that gilt as part of QE.
Had Stevenson’s offer to trade with the Bank been accepted, he would have accounted for 70 per cent of the £1.7bn allocated to QE on that day.
Any subsequent losses made by the Bank would have been indemnified by the Government. This is the first enforcement action for attempted or actual manipulation of the gilt market.
FCA director of enforcement Tracey McDermott says: “Stevenson’s abuse took advantage of a policy designed to boost the economy with no regard for the potential consequences for other market participants and, ultimately, for UK taxpayers. He has paid a heavy price for his actions.
“Fair dealing is at the heart of market integrity. This case sends a clear message about how seriously the FCA views attempts to manipulate the market.”
The FCA says there is no evidence Stevenson colluded with traders in other banks.
Yellowtail Financial Planning managing director Dennis Hall says: “This is a very high fine which the individual would need deep pockets to be able to pay.”