Dutch market manipulated with information about stop loss orders.

urnash · Post by **urnash** » Thu Oct 04, 2007 9:33 am

A Dutch market maker has been fined, after using information about stop loss orders. Apparently Euronext sold some information which contained information about stop loss orders. The AFM (Netherlands Authority for the Financial Markets) fined yesterday a market maker (IMC) for using this information to manipulate the well known stock Wereldhave in October 2005.

The funny thing is that, according to the lawyer representing IMC, this strategy was discussed with the AFM in 2005, and they “more or less said that this strategy was not illegal” What do they mean, more or less? They do not have this written down?

And no, I do not know more that what I can read in the Dutch papers…

Baltazar · Post by **Baltazar** » Thu Oct 04, 2007 10:01 am

Do you know if IMC had this stop loss info through euronext api (that is if the info was "publicly available") or if they had it more or less from "inside".

If this was sold as i understand and publicly available, it seem to be a bit like renaissance approach, no?

I fail to understand how trading on publicly available info can be fined.

urnash · Post by **urnash** » Thu Oct 04, 2007 10:25 am

It seems that the information was sold by Euronext. The following comes from an article in the FD: A spokesman for Euronext said that information about so called stop loss orders were part of historical price information that was sold from May 2005. At the end of that year Euronext removed the information, since they heard that somebody was accused of market manipulation. The AFM and IMC don't want to say if this strategy was used for other assets Smiley

Let's see what the judges make of it...

EDIT: The FD says that this historical information was not only sold for the Amsterdam exchange, but also for Paris & Brusells. Has anybody heard about this information back in 2005?

HLCYG · Post by **HLCYG** » Thu Oct 04, 2007 12:26 pm

"I fail to understand how trading on publicly available info can be fined."

As I understand it, the authority (AFM) doesn't see this as trading on "inside information", but as sending out a "misleading signal" to the markets. Here you can find info on that Prohibition on Market Manipulation

AFM... you never get a ruling, and apparently if you do, you don't...

CFloon · Post by **CFloon** » Fri Oct 05, 2007 1:14 am

>>...using information about stop loss orders...

This is called "trading."

urnash · Post by **urnash** » Tue Oct 23, 2007 9:21 am

For the few among you who speak Dutch, there is a lot of information about this case here. What's funny is that in the beginning they say that IMC only knew (through Euronext) that there is a large stoploss order in Wereldhave. In a later paragraph they exactly know what kind of stoploss order it is. Weird.

EDIT: The link I've given does no longer contain the legal arguments of both sides. Pity, since they were interesting (if you could read through Dutch legalese...)

EDIT2: The legal documents are back online...