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Fine and ban for trader who rigged gilt in QE operations.

BANKING AND CREDIT NEWS-March 21, 2014-Fine and ban for trader who rigged gilt in QE operations


A former Credit Suisse bond trader, Mark Stevenson, has been banned from the industry and fined GBP662,700 for deliberately manipulating a UK government bond.

Stevenson is said to have intended to sell his GBP1.2bn holding to the Bank of England for an artificially high price during quantitative easing (QE) operations, according to the Financial Conduct Authority.

The regulator said that Stevensons unusual trading was reported within 40 minutes on 10 October 2011 and the Bank took the "unprecedented" decision not to buy that gilt as part of its bond-buying programme to stimulate the economy. During QE the Bank bought government bonds from key firms in an auction between 14:15 and 14:45 on a specified day, when it ranked the offers against the mid-market price and bought gilts, beginning with the cheapest, until the target purchase size was met for that day.

Actions by Stevenson, who at the time was a director on the London bond trading desk of Credit Suisse Securities, artificially increased the mid-market price, which then made his offer to sell at a marginally lower price look falsely attractive.

If the Bank has accepted Stevenson's offer, he would have accounted for 70% of the GBP1.7bn allocated to QE on 10 October 2011, the regulator stated. Any following losses the Bank made on the transaction would have been indemnified by the government, at the expense of the taxpayers.

(EUR1 = GBP0.82)

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Publication:M2 Banking & Credit News (BCN)
Date:Mar 21, 2014
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