Facts of market manipulation in transactions with certain financial instruments established
According to the Bank of Russia, prop trading companies are becoming increasingly active in on-exchange trading. A prop trading company is a legal entity whose core operations involve on-exchange trading with the involvement of traders to manage its own capital and conclude transactions on its behalf. The Bank of Russia takes additional measures to monitor and investigate the trading activity of such entities.
Based on the investigation findings, the Bank of Russia has established facts of market manipulation in transactions with futures contracts and shares in on-exchange trading with the involvement of prop trading companies.
Between 13 September 2022 and 2 March 2023, D.V. Sychikov, a developer of trading strategies pursuant to a civil law contract with the prop trading company LLC Lite-invest,1 carried out transactions with futures contracts2 on behalf and at the expense of LLC Lite-invest from the brokerage account of the prop trading company and from his own brokerage account as an individual, acting simultaneously as a seller and a buyer.
Between 15 June 2020 and 4 January 2022, A.S. Dobrovolskaya, S.M. Ovchinnikov, A,V. Desinov, and N.L. Vecherya concluded transactions with shares3 on behalf and at the expense of the prop trading company LLC VATAGA4 following the same plan.
Between 2 May 2023 and 12 May 2023, D.M. Kuznetsov, a developer of trading strategies pursuant to civil law contracts with LLC Lite-invest and LLC Grigoryan Invest,5 used the brokerage accounts of both prop trading companies to perform transactions with futures contracts6 simultaneously submitting various applications on behalf and at the expense of LLC Lite-invest and LLC Grigoryan Invest.
The above transactions resulted in significant deviations in prices, demand, supply and trading volumes. These actions are qualified as market manipulation pursuant to Clause 2 of Part 1 of Article 5 of Federal Law No.
Thus, D.V. Sychikov, D.M. Kuznetsov, LLC Lite-invest, LLC Grigoryan Invest, A.S. Dobrovolskaya, S.M. Ovchinnikov, A.V. Desinov, N.L. Vecherya, and LLC VATAGA violated the prohibition established by Part 2 of Article 6 of Federal Law No.
D.V. Sychikov, D.M. Kuznetsov, LLC Lite-invest, and LLC Grigoryan Invest are subject to an administrative fine for market manipulation.
The Bank of Russia warns prop trading companies carrying out on-exchange transactions on their own behalf and at their own expense that they should exercise internal control over the activity of parties performing transactions on behalf of prop trading companies, including developers of trading strategies. These measures and the training of the said parties will help timely prevent or identify violations of the requirements of Federal Law No.
The Bank of Russia also urges the parties performing transactions on behalf of prop trading companies not to carry out transactions between corporate and personal brokerage accounts on their own behalf in the anonymous trading mode.
1 TIN 0274936578.
2 Futures contracts for ordinary shares of PJSC MMK (MAGN-12.22), Sberbank (SBRF-12.22), PAO Severstal (CHMF-12.22, CHMF-3.23), NLMK (NLMK-3.23), PJSC TATNEFT n.a. V.D. Shashin (TATN-3.23), Sistema PJSFC (AFKS-6.23), FGC UES, PJSC (FEES-3.23, FEES-6.23), the platinum futures contract (PLT-3.23), the GBP/USD futures contract (GBPU-3.23), the EUR/USD rate futures contract (ED-3.23).
3 Shares of PJSC INGRAD (ISIN RU000A0DJ9B4), PJSC Pharmacy Chain 36,6 (ISIN RU0008081765), PJSC Rusgrain Holding (ISIN RU000A0JPNP4), Kuznetsky Bank Public JSC (ISIN RU000A0JSQ66), Kovrov Mechanical Plant PJSC (ISIN RU0006753613), global depositary receipts for the shares of Fix Price (ISIN US33835G2057).
4 TIN 9715351885.
5 TIN 2311331136.
6 The USD/RUB (Si-6.23), CNY/RUB (CNY-6.23), and HKD/RUB (HKD-6.23) futures contracts as well as futures contracts for depositary receipts for the shares of Ozon Holdings PLC (OZON-6.23).
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