Facts of market manipulation in on-exchange trading for bonds of JSC Commercial Real Estate FIC Garant-Invest established
The Bank of Russia has established facts of market manipulation in on-exchange trading for the bonds of JSC Commercial Real Estate FIC Garant-Invest (ISIN RU000A1005T9; hereinafter, the Bonds) over the period from 6 May 2019 to 14 August 2019.
These facts were revealed as a result of the investigation for compliance with Federal Law No.
Market manipulation represented series of mutual transactions regularly conducted across the accounts of established pairs of counterparties — individuals (Ivan V. Maksimov, Timur R. Khodzhiev, Dmitry V. Safronov, Vladimir N. Ekimov, Yuliya S. Chibrikova) with same-type trading behaviour. The transactions across individuals’ accounts were made through highly coordinated mutual bids with identical prices and comparable volumes. Moreover, these bids were practically simultaneous. These individuals made regular and recurrent buy/sell transactions with the Bonds during a trading day, while knowing in advance that they would not yield financial gains. These transactions made up a considerable portion in trading volumes, were devoid of any economic meaning, and caused significant deviations in the parameters of the Bonds’ trading.
According to the findings of the investigation, taking into consideration the established scheme of manipulation in the market for the Bonds, there are signs of transactions with the Bonds made by third parties who had access to individuals’ accounts from a ‘single decision-making centre’.
The established transactions with the Bonds across individuals’ accounts that caused significant deviations in the price and/or trading volume qualify as market manipulation pursuant to Clauses 2 and 6 of Part 1 of Article 5 of the Federal Law.
The Bank of Russia has sent orders to the individuals to cease and desist from actions qualified as market manipulation in the future.
To avoid similar violations qualified as market manipulation, the Bank of Russia recommends that professional securities market participants should:
— identify clients’ non-standard and economically unreasonable trading activity aimed at distorting the parameters of on-exchange trading as part of implementing internal control measures over compliance with the Federal Law;
— notify clients about the inadmissibility of transferring their personal data and access keys to brokerage accounts to any third parties, and about the risks of violating the requirements of the Federal Law that such transfer may cause; and
— improve identification procedures, including remote identification, as well as the forms of interaction with clients to be able to immediately reveal instances where clients’ accounts are used by third parties.
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