The Financial Conduct Authority has fined US based high frequency trader Michael Coscia £600,000 for deliberate manipulation of commodities markets.
The fine marks the first time the regulator has taken action against a high frequency trader.
The FCA found between September and October 2011 Coscia used a self-designed algorithmic programme to abuse markets through a “layering” strategy.
Coscia placed thousands of false orders for Brent Crude, Gas Oil and Western Texas Intermediate futures from the US on the ICE Futures Europe exchange in the UK.
Coscia made profits of $280,000 by taking advantage of price movements through his layering strategy at the expense of other traders.
FCA director of enforcement and financial crime Tracey McDermott says: “Mr Coscia was cheating the market and other participants. High Frequency Trading and the use of algorithms are an important and commonplace part of the markets nowadays but in this case these techniques were deliberately designed to abuse the market, undermining its integrity. This is unacceptable, which is why we have taken tough action to punish Coscia and deprive him of any benefit he acquired.”
The US regulator has imposed a similar fine on Coscia for manipulation of American markets.