Australian Day Trader Pleads Guilty to Charges of Price Manipulation
by
Colin Firth
Trader pleads guilty to charges of using his direct market access to manipulate prices.
Stefan Mark Boitcheff, a trader living in South Australia, has pleaded guilty to market manipulation by the trading of contracts for difference (CFDs) using the direct market access that he had been given.
This came to light during an ASIC investigation. The authority has charged him under sections 1041A(c) and 1041B(1)(a) of the Corporations Act, charges that carry a maximum penalty of 10 years imprisonment, or a fine of $765,000, or both.
Under normal circumstances, CFDs are passed through a market maker who then decides whether to hedge them at the Exchange through direct buying/selling of the shares, or through options, or to pass them to the dealer.
This means that the risk is borne by the market maker and also that this type of CFD has only an indirect effect on the prices at the exchange, as they may never make it to the exchange at all.
Direct Market Access CFDs
On the other hand, direct market access CFDs are those that are executed at the exchange as a form of direct hedge, and hence buys on such CFDs mean that the shares are bought at the exchange, and vice versa for a sell.
This means that the market maker is not involved in the process, resulting in the prices being affected at the exchange due to these orders being executed there. This opens up the possibility of price manipulation.
On these lines, Stefan has been charged with the following:
1) Between 3 January 2013 and 28 October 2013, carrying out 117 CFDs transactions relating to Anteo Diagnostics Limited (ADO) shares which had the effect of creating an artificial price for trading in ADO shares on the ASX; and
2) Between 8 May 2013 and 7 January 2014, carrying out 4 CFDs transactions related to ADO and shares of ADO, that had the effect of creating a false or misleading appearance of active trading in ADO shares on the ASX.
Both of the above are construed as misuse of the DMA CFD given to the trader, having an immediate impact on the exchange prices of the underlying instrument.
Stefan Mark Boitcheff, a trader living in South Australia, has pleaded guilty to market manipulation by the trading of contracts for difference (CFDs) using the direct market access that he had been given.
This came to light during an ASIC investigation. The authority has charged him under sections 1041A(c) and 1041B(1)(a) of the Corporations Act, charges that carry a maximum penalty of 10 years imprisonment, or a fine of $765,000, or both.
Under normal circumstances, CFDs are passed through a market maker who then decides whether to hedge them at the Exchange through direct buying/selling of the shares, or through options, or to pass them to the dealer.
This means that the risk is borne by the market maker and also that this type of CFD has only an indirect effect on the prices at the exchange, as they may never make it to the exchange at all.
Direct Market Access CFDs
On the other hand, direct market access CFDs are those that are executed at the exchange as a form of direct hedge, and hence buys on such CFDs mean that the shares are bought at the exchange, and vice versa for a sell.
This means that the market maker is not involved in the process, resulting in the prices being affected at the exchange due to these orders being executed there. This opens up the possibility of price manipulation.
On these lines, Stefan has been charged with the following:
1) Between 3 January 2013 and 28 October 2013, carrying out 117 CFDs transactions relating to Anteo Diagnostics Limited (ADO) shares which had the effect of creating an artificial price for trading in ADO shares on the ASX; and
2) Between 8 May 2013 and 7 January 2014, carrying out 4 CFDs transactions related to ADO and shares of ADO, that had the effect of creating a false or misleading appearance of active trading in ADO shares on the ASX.
Both of the above are construed as misuse of the DMA CFD given to the trader, having an immediate impact on the exchange prices of the underlying instrument.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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