Facts of market manipulation in on-exchange trading for bonds of Garant-Invest Commercial Real Estate JSC established
The Bank of Russia has established facts of market manipulation in on-exchange trading for the bonds of Garant-Invest Commercial Real Estate JSC (ISIN RU000A1005T9; hereinafter, the Bonds) over the period from 23 August 2019 to 30 September 2020.
These facts were revealed as a result of the investigation of compliance with Federal Law No.
Market manipulation comprised systematically repeated series of buy/sell transactions across the accounts of established pairs of counterparties — individuals with the same-type trading behaviour. Transactions across the individuals’ accounts were concluded as a result of coordinated matched orders with identical prices and comparable volumes. Moreover, these orders were practically simultaneous. Repeated transactions to buy and sell the Bonds were conducted across the individuals’ accounts regularly during a trading day, which knowingly could not produce a positive financial result. Such transactions made up a considerable portion in trading volumes, were devoid of any economic efficiency, and caused significant deviations in the parameters of the Bonds’ trading.
Furthermore, brokerage agreements with the individuals were predominantly concluded remotely via websites or applications of professional securities market participants under a simplified identification procedure.
According to the findings of the investigation, taking into consideration the established scheme of manipulation in the market for the Bonds, there are signs of transactions with the Bonds conducted via a single centre for decision-making by third parties who used the individuals’ accounts without their knowledge.
The established transactions with the Bonds across the individuals’ accounts that caused significant deviations in the price and/or trading volume qualify as market manipulation pursuant to Clauses 2 and 6 of Part 1 of Article 5 of the Federal Law.
To prevent further misuse of the individuals’ accounts, the Bank of Russia has sent orders to the exchanges to suspend trading across the accounts of the above individuals.
The Bank of Russia recommends professional securities market participants to pay particular attention to non-standard trading activities carried out using the said scheme by clients who concluded agreements under a simplified identification procedure, and to take timely measures to deter market manipulation.
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