Facts of market manipulation have been established in transactions involving a number of financial instruments.
Currently, the Bank of Russia notes an increasing dynamic of trading activity among prop trading companies on exchange trades. A prop trading company is a legal entity that primarily conducts trading on organized exchanges, attracting traders to manage the company’s own capital and enter into transactions on behalf of such a company. The Bank of Russia carries out additional measures to monitor and research the trading activity of these entities.
As a result of the inspections carried out, the Bank of Russia has established cases of market manipulation during transactions involving futures contracts and stocks on organized exchanges, which involved prop trading companies.
From September 13, 2022, to March 2, 2023, Sychekov D.V., as a developer of trading strategies based on a civil law contract with the prop trading company LLC «Light-Invest» [1], conducted transactions on behalf of and at the expense of LLC «Light-Invest» with futures contracts [2] from the brokerage account of the prop trading company and from his own brokerage account as an individual, simultaneously acting as both seller and buyer.
From June 15, 2020, to January 4, 2022, Dovbik A.S., Ovchinnikov S.M., Desinov A.V., and Vecheria N.L. conducted transactions on behalf of and at the expense of the prop trading company LLC «VATAGA» [3] with stocks [4] following a similar scheme.
From May 2, 2023, to May 12, 2023, across the brokerage accounts of LLC «Light-Invest» and LLC «Grigoryan Invest» [5], Kuznetsov D.M., as a developer of trading strategies based on concluded civil law contracts with both prop trading companies, conducted transactions with futures contracts [6], simultaneously submitting opposite orders on behalf of and at the expense of LLC «Light-Invest» and LLC «Grigoryan Invest.»
The above transactions led to significant deviations in price, demand, supply, and trading volume. These actions fall under market manipulation according to paragraph 2 of part 1 of article 5 of Federal Law No. 224-FZ.
Thus, Sychekov D.V., Kuznetsov D.M., LLC «Light-Invest,» LLC «Grigoryan Invest,» Dovbik A.S., Ovchinnikov S.M., Desinov A.V., Vecheria N.L., and LLC «VATAGA» violated the prohibition established by part 2 of article 6 of Federal Law No. 224-FZ. Notifications have been sent to these individuals to prevent similar violations in the future.
Administrative fine orders have been issued against Sychekov D.V., Kuznetsov D.M., LLC «Light-Invest,» and LLC «Grigoryan Invest.»
The Bank of Russia emphasizes to prop trading companies conducting operations on organized exchanges in their own name and at their own expense the necessity of implementing internal control over the activities of individuals conducting operations in the interests of prop trading companies, including developers of trading strategies. These measures, along with necessary training for these individuals, will help to timely prevent or identify violations of the requirements of Federal Law No. 224-FZ.
The Bank of Russia also advises individuals conducting operations in the interests of prop trading companies against engaging in anonymous trading operations between corporate and personal brokerage accounts for their own benefit.
When using the material, a reference to the Press Service of the Bank of Russia is mandatory.