Bond traders fined following market manipulation

‘They placed large orders they did not intend to execute’

THE City watchdog has hit three bond traders with bans and fines worth £600,000 for “market manipulation” in the weeks before and after the 2016 Brexit vote.

The Financial Conduct Authority (FCA) said it has issued Diego Urra with a £395,000 penalty and Jorge López González and Poojan Sheth £100,000 each for market abuse and banned them from carrying out any regulated activity.

The trio worked at the London office of Japanese bank Mizuho International at the time of the misconduct.

The FCA said the traders placed “large misleading orders” for Italian sovereign bond futures that “they did not intend to execute, giving false and misleading signals and a false or misleading impression as to the supply or demand” of the bonds between June 1 and July 29 in 2016. It added: “At the same time, they placed small orders which they did intend to execute on the opposite side of the order book.”

The traders repeated this pattern of “deliberate and intentional market manipulation on a number of occasions and were dishonest”, the FCA said.

It is the first time the FCA has publicly targeted a group of traders in a market manipulation probe.

All three traders have contested their bans to a London tribunal that ultimately decides on the punishment.

The FCA made no findings against Mizuho and the bank was cleared of wrongdoing in 2019. Some of the Mizuho traders had years of experience in the City. Mr Urra joined JP Morgan around 2001 and went on to hold roles at Lehman Brothers and Credit Suisse before joining the Japanese bank in London, FCA records show.

Mr López González also worked at Credit Suisse and BNP Paribas, according to the records. Mr Sheth, who the regulator described as the “least experienced trader on the desk,” joined the company in 2014.

A spokesman for Mizuho said: “Mizuho International is not party to these proceedings in relation to former employees, and the FCA has confirmed there are no other investigations or actions pending in respect of these matters.”