Facts of manipulation in markets for USDRUB_TOM and EURRUB_TOM foreign exchange instruments

The Bank of Russia has established multiple facts of manipulation in the markets for USDRUB_TOM and EURRUB_TOM foreign exchange instruments during the period from 13.04.2018 to 13.06.2018 by Nikolay Bychkov and Fengda Trading Ltd (non-resident legal entity).

Acting during the above period as a person authorised to conduct FX transactions and manage the FX position of the State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank) (hereinafter, Vnesheconombank¹), Nikolay Bychkov repeatedly carried out transactions at anonymous exchange trading in collusion with one and the same counterparty — Fengda Trading Ltd throughout the period in question using an identical scheme.

After a purchase or uncovered sale of a certain amount of foreign currency at market prices, Fengda Trading Ltd placed one or several limited orders for closing this new position at more favourable prices. After a short period of time that was generally not sufficient for a foreign currency price to materially change, Nikolay Bychkov, acting on behalf of Vnesheconombank, placed one or several orders, and their immediate execution drove the foreign currency price to the levels conforming to the counterparty’s orders, owing to which the counterparty was able to close its positions with a profit.

This trading behaviour of the counterparty entailed significant deviations in FX instrument trading volumes.

In accordance with Clause 2, Part 1, Article 5 of Federal Law No. 224-FZ, dated 27 July 2010, ‘On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation’, the above actions committed during the period from 13.04.2018 to 13.06.2018 by Nikolay Bychkov on behalf of Vnesheconombank and his counterparty that caused considerable deviations in FX instrument trading volumes are classified as market manipulation.

As a result of over 50 series of transactions under the above scheme, Fengda Trading Ltd obtained income exceeding 49 million rubles.

The Bank of Russia has sent orders to avoid similar violations in future to Nikolay Bychkov and Fengda Trading Ltd.

The Bank of Russia has provided the documents on the investigation to the law enforcement bodies.

¹ Pursuant to Federal Law No. 82-FZ, dated 17 May 2007, as amended on 28 November 2018, Vnesheconombank was reorganised into State Development Corporation VEB.RF.

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