ASIC Initiates Proceedings Against Whitebox for Spike in ASX Index
- This follows the spike in securities prices on ASX in October 2012.
The financial markets watchdog in Australia, ASIC, announced today that it has commenced proceedings in the Federal Court of Australia against Whitebox Trading Pty Limited and its sole director Johannes Boshoff.
The move follows an investigation into the spike in prices of securities comprised in the S&P/ASX 200 Index (Index Securities) that occurred on 18 October 2012.
Along with other market misconduct, the Australian watchdog alleges that it was likely that artificial prices for trading Index Securities were created by order activities from Mr Boshoff and Whitebox on 18 October 2012, as well as on four earlier occasions in the same year.
Alleged Spoofing
ASIC also alleges that orders which both parties had placed through ASX, yet did not intend to trade, had created false or misleading appearances as to the market for Index Securities. This could be considered a form of spoofing,
On October 18 2012, trading activities pushed up the price of ANZ shares by 6.5 percent after the opening bell prior to plunging straight down again, with about one-third of the average daily volume changing hands within the first few minutes of trading. At the same time, large spikes also pushed up the share prices of Commonwealth Bank and Bank of Queensland shares in early trades.
Index Arbitrager
Whitebox had been contracted to provide index Arbitrage Arbitrage Arbitrage is defined as the practice of taking advantage of a price difference between two or more markets.In particular, this involves the simultaneous buying and selling of securities, currencies, cryptos, or commodities in different markets. Arbitrage has the effect of causing prices of the same or very similar assets in different markets to converge over time.In order for arbitrage to occur, there must be a uniform set of conditions that need to be met. For example, the same asset does not t Arbitrage is defined as the practice of taking advantage of a price difference between two or more markets.In particular, this involves the simultaneous buying and selling of securities, currencies, cryptos, or commodities in different markets. Arbitrage has the effect of causing prices of the same or very similar assets in different markets to converge over time.In order for arbitrage to occur, there must be a uniform set of conditions that need to be met. For example, the same asset does not t Read this Term trading software and services to the National Australia Bank (NAB) and the relevant order activities were conducted by Whitebox's trading personnel, including Mr Boshoff, while providing those services. On 23 December 2013, ASIC accepted an enforceable EU undertaking from NAB in relation to its responsibility for the alleged market misconduct of Whitebox's trading personnel.
ASIC is seeking declarations that Mr Boshoff and Whitebox contravened the law and that they pay penalties, together with a restraining order from providing financial services for an agreed period.
The news mirrors a similar case several years ago in which a UK trader was accused over the Wall Street 'Flash Crash Flash Crash The Flash Crash was a major stock market crash that happened on May 6, 2010 in which three major US indices crashed in the span of 36 minutes.In particular, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite fell nearly 9% before rebounding within minutes. The event differed from other crashes in that most losses were recovered.The crash was believed to be caused in part by Navinder Singh Sarao, a British financial trader. Sarao was later charged with spoofing algorithms, utilized j The Flash Crash was a major stock market crash that happened on May 6, 2010 in which three major US indices crashed in the span of 36 minutes.In particular, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite fell nearly 9% before rebounding within minutes. The event differed from other crashes in that most losses were recovered.The crash was believed to be caused in part by Navinder Singh Sarao, a British financial trader. Sarao was later charged with spoofing algorithms, utilized j Read this Term' and who now faces a US extradition hearing. British trader Navinder Singh Sarao was arrested in April 2015 at the request of US authorities who said he helped cause market panic in 2010 from his parents’ home in London. Sarao now faces 22 charges including wrie fraud, commodities fraud and market manipulation carrying sentences totalling a maximum of 380 years.
The financial markets watchdog in Australia, ASIC, announced today that it has commenced proceedings in the Federal Court of Australia against Whitebox Trading Pty Limited and its sole director Johannes Boshoff.
The move follows an investigation into the spike in prices of securities comprised in the S&P/ASX 200 Index (Index Securities) that occurred on 18 October 2012.
Along with other market misconduct, the Australian watchdog alleges that it was likely that artificial prices for trading Index Securities were created by order activities from Mr Boshoff and Whitebox on 18 October 2012, as well as on four earlier occasions in the same year.
Alleged Spoofing
ASIC also alleges that orders which both parties had placed through ASX, yet did not intend to trade, had created false or misleading appearances as to the market for Index Securities. This could be considered a form of spoofing,
On October 18 2012, trading activities pushed up the price of ANZ shares by 6.5 percent after the opening bell prior to plunging straight down again, with about one-third of the average daily volume changing hands within the first few minutes of trading. At the same time, large spikes also pushed up the share prices of Commonwealth Bank and Bank of Queensland shares in early trades.
Index Arbitrager
Whitebox had been contracted to provide index Arbitrage Arbitrage Arbitrage is defined as the practice of taking advantage of a price difference between two or more markets.In particular, this involves the simultaneous buying and selling of securities, currencies, cryptos, or commodities in different markets. Arbitrage has the effect of causing prices of the same or very similar assets in different markets to converge over time.In order for arbitrage to occur, there must be a uniform set of conditions that need to be met. For example, the same asset does not t Arbitrage is defined as the practice of taking advantage of a price difference between two or more markets.In particular, this involves the simultaneous buying and selling of securities, currencies, cryptos, or commodities in different markets. Arbitrage has the effect of causing prices of the same or very similar assets in different markets to converge over time.In order for arbitrage to occur, there must be a uniform set of conditions that need to be met. For example, the same asset does not t Read this Term trading software and services to the National Australia Bank (NAB) and the relevant order activities were conducted by Whitebox's trading personnel, including Mr Boshoff, while providing those services. On 23 December 2013, ASIC accepted an enforceable EU undertaking from NAB in relation to its responsibility for the alleged market misconduct of Whitebox's trading personnel.
ASIC is seeking declarations that Mr Boshoff and Whitebox contravened the law and that they pay penalties, together with a restraining order from providing financial services for an agreed period.
The news mirrors a similar case several years ago in which a UK trader was accused over the Wall Street 'Flash Crash Flash Crash The Flash Crash was a major stock market crash that happened on May 6, 2010 in which three major US indices crashed in the span of 36 minutes.In particular, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite fell nearly 9% before rebounding within minutes. The event differed from other crashes in that most losses were recovered.The crash was believed to be caused in part by Navinder Singh Sarao, a British financial trader. Sarao was later charged with spoofing algorithms, utilized j The Flash Crash was a major stock market crash that happened on May 6, 2010 in which three major US indices crashed in the span of 36 minutes.In particular, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite fell nearly 9% before rebounding within minutes. The event differed from other crashes in that most losses were recovered.The crash was believed to be caused in part by Navinder Singh Sarao, a British financial trader. Sarao was later charged with spoofing algorithms, utilized j Read this Term' and who now faces a US extradition hearing. British trader Navinder Singh Sarao was arrested in April 2015 at the request of US authorities who said he helped cause market panic in 2010 from his parents’ home in London. Sarao now faces 22 charges including wrie fraud, commodities fraud and market manipulation carrying sentences totalling a maximum of 380 years.