The UK's Financial Conduct Authority simultaneously gave its first penalty - of nearly £600,000 - in the area. The Commodity Futures Trading Commission (CFTC) fine was made through powers relating to the 'prohibition of 'the disruptive practice of spoofing by bidding or offering with intent to cancel before execution'. Utra-fast high-frequency trading is based on algorithms - and, in this case, trader Michael Coscia was accused of placing thousands of orders for Brent crude and other commodities on the US-based Globex trading platform and on the UK-based ICE Futures Exchange. The Financial Conduct Authority (FCA) fined him for instigating an 'abusive trading strategy' which confused the markets with a misleading impression of supply and demand.

Cheating the markets

Tracey McDermott, the FCA’s Director of Enforcement and Financial Crime, said: '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.'

David Meister, the CFTC’s Enforcement Director, said: 'While forms of algorithmic trading are of course lawful, using a computer program that is written to spoof the market is illegal and will not be tolerated.  We will use the Dodd Frank anti-disruptive practices provision against schemes like this one to protect market participants and promote market integrity, particularly in the growing world of electronic trading platforms.'