On establishing insider trading on FX market
The Bank of Russia revealed the unlawful use of insider information in transactions with FX instruments USDRUB_TOD and USDRUB_TOM (further referred to as the FX instruments) during trading at PJSC Moscow Exchange (further referred to as the Exchange) in December 2015.
The investigation revealed that during the said period Kirill Semeshkin acting on behalf of Ronin Europe Ltd, a non-resident investment company, repeatedly made transactions with FX instruments using insider information.
This was the information on the orders to sell FX revenue of PJSC Lukoil, including the sale price, amount of foreign currency and the time of order placed in the trading system of the Exchange. The insider information was available to Aleksey Bessonov, head of trade and financial treasury operations at PJSC Lukoil. He placed orders for foreign exchange sales to the bank and was able to determine the price and amount of the order and its execution.
The insider information received by Kirill Semeshkin allowed Ronin Europe Ltd to buy foreign currency at a lower price to close transactions with PJSC Lukoil. As a result of the unlawful use of insider information, Ronin Europe Ltd gained excessive income of no less than 146 million rubles. At the same time, the activity of Aleksey Bessonov inflicted similar damage to PJSC Lukoil. The Bank of Russia is not aware of whether Ronin Europe Ltd closed these transactions in its own or its customer’s interests.
The unlawful enrichment scheme forced PJSC Lukoil to sell more foreign currency at dumping prices. Given the short-term but considerable impact on the market price of FX instruments, other trading participants and their customers could also suffer losses.
The Bank of Russia submitted the respective investigation materials to law enforcement agencies and has taken measures aimed at preventing similar situations in the activity of organisations mediating transactions with FX instruments at the Exchange.
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