By Huw Jones
LONDON - Britain's financial regulator said on Friday it was investigating three traders for alleged "spoofing", or creating a misleading market in futures, at an unidentifed bank during the period when Britain voted to leave the European Union.
The Financial Conduct Authority (FCA) said it gave three individuals warning notices on July 16 to say it was proposing to take action in respect of their conduct between June 1 and and 29 July, 2016. It did not name the individuals.
The FCA said the three "deliberately engaged in market abuse" by placing large orders for futures on a trading platform that they did not intend to execute, while placing small orders on the other side of the transaction.
This was done individually and collectively, the watchdog said.
"Through the misleading orders, the individuals falsely represented to the market an intention to buy or sell when their true intention was the opposite," the FCA said.
"The individuals’ intention in placing the misleading orders was to facilitate the execution of the genuine orders." Such conduct gave "false and misleading" signals about the supply and demand of futures, the FCA said.
The next stage is for the allegations to be heard by the FCA's regulatory decisions committee, which will decide on what action, if any, should be taken.
The three individuals will have a right to make representations to the committee, whose decisions can also be appealed at an independent tribunal.