Disciplinary Committee at OMX Nordic Exchange Stockholm fines Carnegie Bank A/S (22/07)

Carnegie Bank A/S has contravened the OMX Nordic Exchange Stockholm’s rules concerning trading in derivative instruments by having a broker place orders for derivative instruments with the sole intention of misleadingly affecting the price of another derivative instrument. Subsequently, the broker was able to implement transactions in the other instrument at a price that exceeded the price that would have applied had the orders not been placed. The OMX Nordic Exchange Stockholm’s Disciplinary Committee has ruled that Carnegie Bank A/S must pay a fine of SEK 300,000.

In accordance with the rules and regulations for trading in derivative instruments on the OMX Nordic Exchange Stockholm, an exchange member is not permitted to consciously or negligently disseminate incorrect or misleading information, or in any other way take misleading actions that could affect the price or the order situation for an instrument or underlying instrument that is listed on the Exchange.

At the end of April 2007, a broker employed by Carnegie placed buy and sell orders for an index future in a manner that resulted in the price of four options in the same index changing so that it became possible for the broker to sell 50 contracts pertaining to each option at a price that exceeded the price that would have applied had the placing of orders for the future not occurred. A few seconds after the transactions involving the options had been implemented, the broker revoked his orders for the future contracts, which resulted in the prices for both the future contracts and the options reverting to the levels that had pertained prior to the placing of orders for the futures.

The Disciplinary Committee shared the Exchange’s view that the placing of orders in the future contracts had been implemented solely in order to affect the price of the options and thus was not matched by any intention to implement a trade in the future contracts. Even though the transactions did not involve any substantial amounts, the Disciplinary Committee concluded that they represented a serious breach of the regulations and ordered Carnegie to pay a penalty of SEK 300,000.