French watchdog fines Morgan Stanley $ 22 million for manipulating bond prices

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The French market surveillance authority, the AMF, announced on Tuesday that it had fined US bank Morgan Stanley (MS.N) 20 million euros ($ 22 million) for manipulating sovereign bonds.

The AMF indicated that the fine concerned the manipulation of the price of 14 French government bonds (OAT) and eight Belgian bonds (OLO) on June 16, 2015, as well as an OAT futures contract.

The AMF noted a significant sale of government bonds on June 16, 2015, which disrupted the trading system for French MTS Global Market bonds, causing transactions to be suspended for four minutes and liquidity levels to drop for approximately one hour. time.

Morgan Stanley has said he intends to appeal.

“The activities in question have been carried out in accordance with market practice and within the scope of the company’s role and obligations as a market maker,” the bank said in a statement.

The AMF reported on June 16 at 9:20 a.m. local time that Morgan Stanley International, located in London, had “aggressively bought” French, German and Belgian debt futures on Eurex, the derivatives exchange. by Deutsche Boerse (DB1Gn.DE).

At 9.44 a.m. local time on the same day, the US bank’s European Governments Bonds and Agencies Desk instantly sold 815 million euros ($ 898.29 million) of 17 different government bonds on the MTS platforms. France and Broker Tec, as well as via MTS Belgium.

The watchdog said Morgan Stanley was pricing some bonds at abnormal and artificial levels, citing high volumes traded by traders and the fact that the bank’s large trade had the biggest positive impact on prices. term that day.

The AMF also clarified that Morgan Stanley had declared that the price variations were “normal” given the volumes traded and that they were mainly due to the exceptional circumstances of June 16, 2015.

The watchdog also said Morgan Stanley said the acquisition of French government debt futures was part of a move to “wipe out a deficit position” and that there was no motivation to influence prices.

Morgan Stanley is one of the 15 primary dealers for French government bonds which should ensure the liquidity of the secondary market for French Treasury securities, according to the French Treasury.


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